Pitfalls When Doing Business Abroad

Pitfalls When Doing Business Abroad

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    Antti Tumelius
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    Re^5: Corruption, nepotism and graft
    You are right about the fact that you can't expect individual who has barely enough money to feed his/her family to be completely honest and refuse bribes etc.

    However, I think that in developing societies the fight against corruption should come first. In theory corruption obstructs a free market mechanism (which is supposedly the most efficient way of distributing resources) and thus slow down the development. Usually it is the rich and powerful who benefit from corruption, and to me it just seems to make the rich richer and leaving the poor with even less.

    At least I hear about this happening in Malaysia (I'm not an expert though). Some good plans to help the common people are ruined because of corruption and the inefficiency it causes. Someone estimated that about 10% of the 9th Malaysian Plan (the local 5-year plan for development) goes to corruption. This means a transfer of about 20 Billion Ringgit (about 5,5 billion USD) from taxpayers to the elite who run the show. You could build a few rural roads and hospitals with that money...
    • 29 May 2006, 03:19 am
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    Antti Tumelius
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    Re^6: Corruption, nepotism and graft
    Dr. Sam

    I found your comment about independent management and corruption very interesting. Would you like to share your views about that a little more? Should we start a new thread about this because it is slightly off topic? For me it seems like a basic principal-agent problem which needs to be solved individually in each case. If the agents have a wrong set of incentives and controls, then they are just left with their moral judgment. And we have enough evidence that it simply is not always enough.

    As for EU corruption and mismanagement of funds, I just read an article about a Finnish guy who is retiring from senior EU auditor position (basically audits EU), and he didn’t seem too pessimistic about this. There is some corruption, but not that much. Media is only interested in those corruption cases, so general public has left with a view that everything is corrupted in there.

    BR

    Antti
    • 29 May 2006, 04:28 am