
SECTION B (20 marks)
Answer all questions in this section.
3. Read the following passage and then answer the questions that follow.
There are people who argue that corruption has no welfare losses because a bribe is simply a transfer.
Instead, they believe that bribery is good because it is a way to avoid cumbersome regulations which
sometimes prevent people to an easy accessibility to their rights.
Exponents of this argument think that bribes are a reward to officials who are badly paid. On the
contrary, many studies have shown that corruption and especially corruption in international business
is a major impediment to social, political and economic development. Corruption in international
business distorts trade and services and the flow of capital undermines creation and functioning of
democratic institutions.
Bribery undermines goals of many countries to promote democracy. For example, when bribery is
used in the election of Members of Parliament, a President and other people’s representatives, then
such elections are not free and fair. Capable and honesty people are blocked just because corruption
can undermine leaders and they cannot buy votes.
Corruption deters investment and hurts the country’s ability to attract foreign capital. allocation of
capital is distorted and valuable resources are lost. It can lead to unnecessary or inappropriate
purchases.
Corruption also weakens global trading system, reduces the benefits of free trade and agreements.
Corruption cuts exports because companies that produce better products at better prices often lose out
to sellers who win because of bribes they pay, not quality and price of their products. It is estimated
that companies offering bribes in US win roughly 80 per cent of foreign contracts.
Some nations encourage bribery by making such payments tax deductible. Germany is one of such
countries, even though bribing a domestic official is a crime.
Questions
(a) From the passage you have read, define the word corruption.
(b) According to the author, what ill-effects does corruption cause?
(c) Provide other meaning of the world cumbersome as it has been used in the passage.
(d) The author says “Exponents of this argument think that bribes are a reward to officials who are
badly paid”. What other causes of corruption do you know apart from this?
(e) From your own understanding suggest possible solutions which can reduce or eradicate
corruption.