• Corruption is broadly defined as “the misuse of public power for private gain.” (Rose-
    Ackerman 1999). Klitgaard’s widely-cited formula explains the demand side of
    corruption: corruption equals monopoly plus discretion minus accountability (Klitgaard,
    1988). According to this formula, corruption flourishes when (1) government officials
    hold a monopoly over a good or service, (2) have discretion over how that good or
    service can be allocated, and (3) oversight and accountabilities are absent (Klitgaard,
    1988; Graycar & Sidebottom, 2012).
    Corruption has been found to be both the cause and the consequence of the erosion of
    trust in both other people and in government ins
  • titutions. (Rose-Ackerman 1999). More
  • than $1 trillion, or about 3% of the worl
  • d gross domestic product (GDP) goes to paying
    bribes (Mazur and Aggarwal, 2015; World Bank, 2017). There is a virtual consensus
    among economists that corruption is economically inefficient and associated with
    negative over-all economic activity (Bose, 2010). Interestingly, corruption is both mostcommon and least inefficient in autocracies, the point being that an autocrat is usually in
    the best position to deliver on the object of a corrupt payment (Alon, 2016). And while
    corruption stunts economic growth in all societies, it is most harmful in societies with
    weak governments transitioning from autocracy toward democracy, sometimes called
    anocracies (Alon).
    While it is impossible to determine the precise level of corruption, a 1997 World Bank
    estimate placed the total corruption involved in international trade at $80 billion per year
    (Walsh, 1998). A World Bank survey of 3600 firms in sixty-nine countries found that
    40% of those businesses pay bribes. In industrial countries, 15% of businesses were
    found to pay bribes, but in the former Soviet Union, this figure jumped to over 60%
    (Omestad, 1998).