International Fraud -- the Case

International Fraud -- the Case of Mali and Senegal

The growing forces of globalization and market liberalization have generated a wide series of effects upon all features of the everyday life. More importantly, these changes are obvious not only within the highly developed economies, but also in smaller and less prosperous countries. The African continent is generally a poor one, with a poor infrastructure, industry and overall economy. Characterized by decades of economic and political instability, the countries in this region find it difficult to overcome the impediments. One of these major challenges in their path to national well-being is fraud, which impacts international business.

The Institutional-Based View

Fraud is extremely common in African countries Senegal and Mali and this is often associated with the high levels of taxes. With large barriers impeding free international trade, the customs workers are highly tempted to allow shipments of commodities without the proper documentation in exchange for considerable bribes. With this in mind then, one can come to the conclusion that, through the issuing of their restrictive trade policies, the African authorities impede globalization, free trade and encourage fraud. Then, there is also the legislation referring to the processes of clearing the goods traded (Stasavage and Daubree, 1998). The regulations are often difficult to comply with, tempting once again fraud and bribery.

Another point to make within the institutional-based view of international fraud refers to the investments federal organizations make in science and technology. From this standpoint, Lawrence K. Altman and William J. Broad (2005) argue that federal institutions often misdirect their funds towards investments that will materialize in increased levels of fraud, rather than offer improved control and reduction solutions. These situations occur even more so in instances in which the governmental institutions reveal a direct interest. Altman and Broad explain this by quoting Dr. Smith, a former editor with the British Medical Journal; he argues: "Unfortunately, individual institutions have an enormous conflict of interest. It's a lot easier for such bodies, when examining an allegation of fraud on their own, to slide someone out of the organization or to suppress it altogether."

3. The Resource-Based View

A different perspective to the analysis of international fraud is made obvious through the lenses of resource provisions and constraints. One can for instance look at the scarcity of financial resources used to finance the living standards of the population. It is then understandable that due the reduced access to resources that sustain increased living conditions, the individuals will often accept bribery and engage in illegal trade. This is obvious at all institutional levels and highly popular in Mali and Senegal. Emerging economies strive to attract foreign investors and often offer illicit incentives. This type of international fraud occurs due to a desire to develop a climate that allows investors to benefit from the comparative advantages of countries such as Mali and Senegal (Barney and Hunt). These countries generally compete against other African states in order to attract more investors and, when the resources are insufficient to convince these foreigners, state officials engage in frauds.

4. Impact on International Business Setting

The increased levels of fraud generate a series of chain reactions upon the business setting within Senegal and Mali. First of all, they reduce general trust in the economic and political systems. This then means that foreign investors are not attracted to the region and that developmental opportunities are reduced. This in turn materializes in the lack of new jobs. It means as such that the federal authorities are unable to cash in taxes from foreign investors conducting business operations within Senegal and Mali. Consequently, the large majority of the taxes will be imposed onto the national population. Despite the increased fiscal charges that generate populous dissatisfactions, the governments will still be unable to gather sufficient money to invest in the development of the public services, such as education, healthcare or infrastructure. More clearly, the direct effects of fraud are: "market allocation mechanisms are distorted; human and capital resources are diverted from productive activities; and the state and its institutions are undermined. Consequently, political stability and independent economic policy are endangered" (Stasavage and Daubree, 1998). All in all, at the ends of this chain sit fraud and poverty, leading as such to the conclusion that high levels of fraud lead to poverty.