Annotation: The paper examines the impact of corruption on economic development. The focus is made on its global nature, the subjective and objective causes and sources of its origin, and the main measures for overcoming them.

The key-words: Keywords: Corruption, Economic Development, Global Corruption, Corrupt Deal. 

Introduction 

Corruption is a Latin word (corrumpere) which means spoilage. This term is the most often applied to the bureaucratic apparatus and political elite. This means that officials use own status for personal gain, contrary to the established rules of law. Corruption is one of the strongest barriers to economic development, since it causes inefficient use of resources and produces many other negative consequences. Nowadays, it’s  acquired a global character. 

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Corruption is not a new phenomenon, it had been originated in the distant past. History has preserved the mention of the Sumerian king, Urukagina, from the city-state of Lagash (XXIV century BC) who was a fiercely fighting with corruption king, and so on.

Nowadays corruption is an international problem [Tanzi  V., 1998]. In the conditions of globalization, the facts of bribery of foreign state officials by corporations have become more frequent and massive issue. The rise of corruption in any country of the world can have a negative impact on the economies of other countries and so on. Nowadays corruption exists into varying types in different countries in all over the world. And in the context of globalization, corruption takes on the interstate and international forms. "Corruption is not a local problem, but has become a transnational phenomenon that affects societies and economies of all countries worldwide." At the international level it is associated with huge monetary assets and resources, it has a negative impact on entire industries, and in some cases, threatens the prospects for economic development of countries. Corruption forms a negative image of the state, both in the eyes of its citizens and between economic and political partners from other countries. Researchers note that globalization leads to the unhindered spread of corruption in many countries, and also has a negative impact on many areas of public life. It should be noted that the absence at the international level of a unified generally accepted definition of corruption introduces some difficulties in the fight against it. On the other hand, the reasons for the lack of a single definition are understandable; it includes the different political structures of countries, and the forms of its economy, the level of social development, and, of course, the real differences between cultures and mental characteristics of concrete countries. The study of international normative legal acts suggests that the international community does not narrow the content of corruption to bribery of officials, but expands the approach to the study of this phenomenon. Official embezzlement, lobbying, bribery, forms of misuse by officials of their power, an advantage of the status of one citizen over another, all these aspects are made corruption in the international sense [Кейзерова Ю. В..., с. 526]. As historical experience and modern practice show, not a single state has managed to completely solve the problem of corruption. At the end of the last century and beginning of this one, a number of international organizations were created to counter global corruption [Моисеев В. В..., с. 180].

Various causes of corruption can be identified. The biggest reason for corruption is existence of the state, itself, but the absence of the state could create much more problems than is made by corruption .

We can distinguish between objective and subjective reasons for  origin of corruption, but in our opinion, these reasons are mainly subjective and the most important of them is the existence of imperfect and weak state institutions (mainly formal, but also possible informal), at first of all, the imperfect system of governing. Imperfect institutions mean:

1. Underdeveloped state institutions. The most obvious example of this is a very long-term process of the post-communist transformation in some countries (including Georgia), when at the first stage, old state institutions were destroyed and replaced by less powerful and improved institutions. These conditions create the good greenhouse conditions for development corruption;Existence of the conservative legislative norms. More or less, such a thing can be found in the legislative acts of all countries, since any law becomes an obsolete by time and needs to be updated, which is seriously opposed by the bureaucracy of  countries with high level of  corruption;
2. Imperfect market infrastructure. Examples of this are post-communist countries. For example, in Georgia, despite the fact that economic reforms began 15 years ago, a full-fledged market infrastructure has not yet been created. This means that in such countries market forces are weak and bureaucracy is excessive in the functioning of the economy;
3. Existence of the conservative legislative norms. More or less, such a thing can be found in the legislative acts of all countries, since any law becomes an obsolete by time and needs to be updated, which is seriously opposed by the bureaucracy of  countries with high level of corruption;
4. It still exists an imperfection of newly adopted laws. Noteworthy is the tax legislation system. If the amount of taxes is higher than optimal, then the taxpayer wants to hide them, he/she tries to achieves it by making a deal with the representatives of authorities and thus increasing a size of the shadow economy. Some businesses leave the market altogether. The high taxes also discourage new businesses from entering to the new market. Naturally, in all these cases, both, the payment base and budget revenues are reduced. And, most importantly is that it hinders the development of  economy. When it comes to optimal size of taxes, the picture is quite to opposite side. Of course, in countries with high level of corruption, the bureaucracy doesn’t even want to determine the optimal amount of taxes. However, it should be noted that its exact definition is almost impossible to be confirmed.

The tax rates in Georgia haven’t been optimal over the years, which has significantly contributed to growth of the shadow economy. Currently the tax code is more liberal issue. However, the process of improving is always a necessary issue. In our opinion, the amount of taxes should be determined not subjectively, but based on the results. If existing rates are found to hinder development of  economy, they should be changed rapidly until will not reach a practically optimal value. In general, it is probably necessary to involve the experience of countries where “automatic stabilizers” or “built-in stabilizers” are used so that tax rates will be changed automatically.

1. A low quality of implementation of laws, regulations, decrees, etc. These shortcomings were typical for countries with economies in transition, since there are no analogues in the world for  that transformation, and therefore it is impossible to find a new path without making mistakes.
2. Existence of habits and traditions in the current society that contribute the strengthening of corruption;
3. A low level of salaries in the public sector, contrary to the private one;
4. The process of separating local bureaucratic elite from citizens;
5. Macro-economic instability, etc.

There are also the objective reasons for corruption. Among them can be mentioned:

1. The necessity for state regulation of  economy. Separation of  management system. If all the reins of government would be in the hands of one person (for example, in the case of an absolute monarchy), then corruption would no longer exist, since corruption makes no sense to the ruler, who could embezzle the absolute wealth;
2. The ambiguous nature of laws;
3. Impossibility of carrying out the comprehensive control.The ambiguous nature of laws;
4. A low level of civic education ;
5. Incompetence of the bureaucracy;
6. A low level of state control and monitoring by citizens;
7. The state monopoly on  production of certain services;

The main sources of corruption can be identified:

1. The state budget from which are made the state expenditures (investments, state procurements, etc.);
2. Non-budgetary funds;
3. Privatization;
4. The tax benefits;             
5. Tax offenses;
6. Sale of raw materials and resources by lower market prices;
7. The extraction of natural resources;
8. The sale of state assets;
9. The shadow economy;
10. Transfer of commercial activities to the private individuals;
11. Appointment to positions;
12. The granting the right to participate in elections;
13. The foreign aid, etc .;

Corruption is associated with many negative events. For example, such as: an inefficient

use of economic resources; Irrational appropriation of foreign aid; improper usage of individual skills; cultural and intellectual decline; loss of authority by government; distortion of international relationship, etc.

Under a corrupt government, the state resources do not flow in accordance with  requirements of  economy, but where it would be more convenient and easy to steal them.

The question is, is it economically profitable to fight corruption completely? Naturally, if

corruption can be completely eliminated without a huge spending, then it will be a desirable and profitable, of course.  But it can be achieved only when there will no longer be people who are involved in corrupt deals, but in fact, such a case does not exist and will not be real in the future. Thus, it becomes necessary to compare the losses ( the corrupt losses) incurred as a result of corruption and the costs which should be incurred for eliminate it.

In general, the expenses are very important for complete elimination of corruption and it includes not only material costs of the relevant measures, but also the costs of restricting a freedom of  society. However, the stronger fight should be continue against corruption by the state, and in the same time will increase the level of corruption. The expenditures on the path to eliminating corruption are gradually increasing and not decreasing. Nevertheless, the fight against corruption can have significant positive consequences.

From an economic point of view, the spending to eradicate corruption should continue until the economic consequences of eradicating it will not outweigh the costs. The optimal level of corruption is obtained when the costs incurred in eliminating it are equal to the output obtained, since the expenses will then exceed its output.

 One of the macroeconomic measures to reduce corruption is to create a macroeconomic climate that eliminates the root causes of corruption and, above all, improves existing of the strength institutions. In addition, we can highlight the following key methods of fighting with corruption [Козонов Э. Ю., 2006]:

1. The tightening of laws and enforcing them will increase the risk of corruption. They go for corrupt deals when the bureaucratic rent is much higher than the risk of participating in corruption. The tightening the laws and enforcing them will naturally increase that risk, which will obviously reduce corruption;
2. A process of strengthening the market forces. In the presence of improving of market mechanism, there is less need for state intervention in economy and therefore the number of corrupt transactions is reduced;
3. Should be increases the salaries of officials. It is true that an increase of salaries for civil servants may not lead to a direct proportional reduction in the level of corruption, but it is also clear that a more materially secure person will be less at risk. This is evidenced by the fact that in the countries with the lowest level of corruption in the world, the salaries of civil servants are 2-3 times higher than salaries in the private sector;
4. A financial control (audit);
5. An independent judiciary, etc.

But all these measures will be effective only when the highest representatives of government in the country are interested in it. If we are dealing with opposite situation, then the problem must be solved by using a power of the people, that is, the relevant government must come to power through elections.

In order to take anti-corruption measures, it is very desirable to have an anti-corruption macroeconomic mechanism in the country, in which all three main branches:  the government, parliament, judiciary system and free media will be actively involved into process. 

Conclusions 

1. The term "corruption" is the most often applied to the bureaucratic apparatus and political elite. This means that officials use own status for personal gain, contrary to the established rules of law;
2. Corruption is one of the strongest barriers to economic development, since it causes inefficient use of resources and produces many other negative consequences;
3. Corruption has acquired a global character to this day. Globalization is spreading corruption in many countries;
4. Corruption negatively affects all industries and threatens the economic development prospects of countries;
5. Corruption creates a negative image of the state in the eyes of its citizens, as well as economic and political partners of other countries;
6. Various causes of corruption can be identified. The biggest reason for the existence of corruption is the existence of the state itself, but the absence of the state has created far more problems than corruption;
7. The causes of corruption are mainly subjective and the most important of them; Underdeveloped state institutions; arasrulyofili sabazro infrastruqtura et al and so on.
8. There are also objective reasons for corruption. Among them may be: the need for state regulation of the economy, the fragmentation of the management system and so on;
9. The main sources of corruption can be identified: state budget; Non-budgetary funds; Privatization; Tax breaks and so on;
10. Corruption is associated with many negative events. For example, with: inefficient use of economic resources; Irrational appropriation of foreign aid and so on;
11. The following are the main methods of combating corruption: tightening laws and enforcing them, strengthening market forces and so on;
12. During corrupt governance, state resources flow not in accordance with the requirements of the economy, but where it would be more convenient to steal it;
13. Expenditure on eradicating corruption in economic terms should continue until the economic consequences of eradicating corruption outweigh the costs;
14. One of the macroeconomic measures to reduce corruption is to create a macroeconomic climate that eliminates the root causes of corruption and, above all, improves existing of the strength institutions. 

References 

1. Tanzi  V. 1998. Corruption around the world. // IMF Staff Papers. – 1998. –Vol. 45, No. 4. – P. 227 k – I
2. Кейзерова Ю. В., Стеклов В. А. Коррупция в контексте глобализации https://moluch.ru/archive/149/42227/
3. Козонов Э. Ю., Жукаев А. 2006. Коррупция: истоки и пути преодоления.  М.: МАКС Пресс, МГУ
4. Коуз Р. Фирма. Рынок и право. М.: Новое издательство, 2007. 279
5. Моисеев В. В., Ницевич В. Ф. Коррупция как глгбальная проблема: история и современность. https://cyberleninka.ru/article/n/korruptsiya-kak-globalnaya- problema-istoriya-i- sovremennost/viewer