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Effects of Corruption on Capitalism and Foreign Investment

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What are the effects of corruption on capitalism and foreign investment?
Be sure to include at least the following points in your paper:
- What are the types of corruption?
- What are effects of corruption on MNCs?
- How can MNCs deal effectively with these problems?

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Corruption impacts countries in many ways, impacting progress and development. Corruption increases the cost of government and may lower the quality of infrastructure. Corruption impacts capitalism and foreign investment in that it changes the environment, affecting decisions and actions. Corruption causes discriminatory treatment. It also interferes in managerial decision making.

Multinational corporations may be unable to compete in certain countries due to dishonesty by government officials, dependent upon a system of graft and bribery to approve and facilitate permits and various company operations. Corruption may be at the highest levels of government, where government decisions regarding military equipment, civilian aircraft, infrastructure or broad policy decisions about industrial subsidies are made, based upon favoritism rather than ethical weighing of facts. Corruption may involve elected officials and politicians as well as nonelected officials. Corruption may be voluntary and petty, for instance, paying to expedite a building permit. It may be extorted, in which a licensing officer holds up a building permit until a bribe is pad. It can also be grander, in which a voluntary bribe is paid to a public elected official in exchange for awarding a contract for a large municipal building, despite the contractors lack of experience. Or a grand extorted bribe might be having a high-level construction ministry official threaten to condemn the building unless a large bribe is paid. Each of these cases causes inefficiencies and inequities, as well as an undermining of political legitimacy.
Bribes to public officials are easy to define as corruption, and involve a "direct exchange of money for favors"(Elliott, n.d.). An illegal exchange involving indirect exchange is harder to ...

Solution Summary

This solution discusses the effects of corruption on capitalism and foreign investment. It describes types of corruption, its effect on MNCs, and how to deal with the problem. Includes examples and APA formatted references.

See Also This Related BrainMass Solution

Corruption: Impact on Foreign Investment and Capitalism

Write a research paper on the following: What are the effects of corruption on capitalism and foreign investment?
Include what the types of corruption are, the effects of corruption on MNCs, and MNCs can deal effectively with these problems. Refer to the following attachments for research purposes and include the different points of view into the paper.


Shore, C. (2004). Corruption Scandals in America and Europe. Corporate Scandal: Global Corporatism Against Society, 3, 29.

Tesař, F. (2005). Money Down the Drain. The New Presence, (3-Autumn), 38-39.

Skąpska, G. (2009). The rule of law, economic transformation and corruption after the fall of the Berlin wall. Hague Journal on the Rule of Law, 1(2), 284-306.

Chen, X. Y. (2007). Defensive medicine or economically motivated corruption? A Confucian reflection on physician care in China today. Journal of Medicine and Philosophy, 32(6), 635-648.

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