Bribery
This is an action of persuading someone to act in one's favor, typically
illegally or dishonestly by a gift of money or other inducement.
Bribery may be
something illegal, wrong and dishonest, but it has become a culture in
Malaysia. People in Malaysia use bribery as a way out of trouble, or to
negotiate deals while those in the authorities and on the side with power use it as a way to earn profit.
Now, bribery has
become an integral part of our society. A general consensus among the Malaysian
people is that as long as you have money, you can get out of any problem. For
example, whenever someone breaks a traffic law and gets caught, their first
thought is "it's okay, I'll just bribe the police officer". This
may sound disrespectful to the authorities tasked with the protection of our
lives, but the fact that they so willingly receive, and in some cases, initiate
the bribe makes them lose the moral high ground .
Now when we look at
the implications that bribery has on our economy, the effects are quite
significant. According to Transparency International Malaysia-Malaysia,
Malaysia took the 60th spot this year, a drop of four places from last year.
Malaysia scored 4.3 on the survey, far behind Singapore (9.3) and Brunei (6.3).
Malaysia is among the 60% of countries surveyed that scored below 5 and its
underperformance and stirred debates about the seriousness of public sector
corruption in Malaysia.
Corruption has a
negative impact on productivity, which dampens our long-term economic growth.
This is because bribery increases the costs of doing business. In fact,
according to the research done by Transparency International, 50% of companies
surveyed said that a competitor's bribery has cost them business in the past
year (2012).
Corruption also deters investments because bribery is seen as a form of tax on
investments. For example,the AFP news report
on Indonesia reported the London-based risk consultancy Business Monitor
International as saying that ''high levels of corruption have severely impeded
investment in the country's infrastructure for non-public sources".
Corruption also causes an inefficient allocation of resources, as the decision of public officials and politicians will be biased towards transactions that offer higher opportunities to strike up corrupt deals that will be financially beneficial to them. Resources would be wasted on projects that have little to no economic prospects.
Based on economic theory, corruption, which is a form of tax, decreases aggregate supply. That is, it shifts the economy's positively-sloped aggregate supply curve to the left. Assuming that the economy's negatively sloped aggregate demand curve remains stationary, the aggregate supply curve's leftward shift implies a rise in the aggregate price level
Mounting public
sector expenses as a result of corrupt public sector officials siphoning off
public funds meant for development can lead to the government printing money to
finance the country's budget deficit.
Based on economic
theory, such a move would raise aggregate demand, i.e. shift the economy's
negatively sloped aggregate demand curve to the right. Assuming that the
economy's positively-sloped aggregate supply curve remains stationary, the
aggregate demand curve's rightward shift implies a rise in the aggregate price
level. This is a contributing factor to a possible inflation.
Written by, Keeve Wong Weikit (0315620)
Sources :
Hi, I was wondering, what other factors are there that can cause a shift in the aggregate supply curve ?
ReplyDeleteWell, Georget, I would be happy to answer your question.
ReplyDeleteAmong the factors that can cause a shift in the aggregate supply curve is consumer expenditure. For example, consumer wealth.Greater wealth means household are financially more secure and thus more willing to spend, AD shifts to the right, and vice versa.
Another factor that can causes a shift in the aggregate supply curve is interest rates which is a component of Investment Expenditure.Interest rates is a cost of business. Higher interest rates will cause investment to fall and shift the AD curve to the left, and vice versa.
Another factor that can cause a shift in the aggregate supply curve is Government Expenditure. Higher government spending will shift the AD curve to the right while lower government spending will shift the AD curve to the left, and vice versa.
Thank you :) May I also trouble you to explain the determinants of aggregate suuply?
ReplyDeleteNo there's no trouble at all Georget :)
ReplyDeleteOne of the determinants of Aggregate Supply is resource prices. This includes prices of domestic resource and prices of imported resources.
If prices of resources ( raw materials and labour) rise, cost of production will rise, it will shift the AS curve to the left, and vice versa.
Another determinant of Aggregate Supply is level of productivity.
If productivity of resources ( raw materials and labor) rises, cost of production will fall, it will shift the AS curve to the right, and vise versa.
Another determinant of Aggregate Supply is changes in Government Policies.
These include business taxes and subsidies and government regulation.
If business taxes rise, cost of production will rise, it will shift the AS curve to the left.If subsidies are given, cost of production will fall, it will shift the AS curve to the right.
Thank you very much for your helpful replies! This information is very useful, thank you very much !
ReplyDelete