Ethics and Sustainability: Corruption and its Effects on Government Spending and Economic Growth

Running head: ETHICS AND SUSTAINABILITY
Ethics and sustainability
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2ETHICS AND SUSTAINABILITY
Table of Contents
Introduction................................................................................................................................3
Corruption and its effects on Government.................................................................................3
Government Spending, Corruption and Economic Growth.......................................................4
Proposition.................................................................................................................................6
The financial rule is always considered to be binding, the effect of different component of
government expenditure depends on relative public expenditure shares which is devoted to
different components and their relative elasticities related to the output (MAURO 2016).......6
Recommendation........................................................................................................................8
Conclusion..................................................................................................................................9
Reference List..........................................................................................................................10

3ETHICS AND SUSTAINABILITY
Introduction
This report focuses on discussing the issues that evoke corruption in Australia and the
loopholes of the national governance that is being used for the spread of corruption in the
country. The ways in which corruption have spread have been highlighted in this report.
Corruption and its effects on Government
In simple words, Corruption is a type of dishonesty done by the people in the
government in higher official post of important authorities to get illicit benefit.
Systematically the corruption is divided into three scales – First one is Petty Corruption,
where the corruption occurs at small scales in the lower category of Government officials in
Government authority such as police stations, registration offices and so on. Second one is
Grand Corruption, where the corruption occurs at high level in the top and mi ranking
government officials and authorities. The last one is Systemic Corruption, where the
corruption takes place because of inefficiency or weakness of the Government (GUPTA, DE
MELLO and SHARAN 2018). The direct effect, which government suffers due to these three
scales of corruption is increase in the government spending allocations where the government
spends lot of money in the spheres of Defence and general services of public like Education,
health, recreation and so on but the total money allocated for these never spent for these
works (Delavallade 2016). Due to the heavy increment in government spending allocations,
not only the government suffers, the public also suffers as the Consumer Price Index (CPI)
decreases. As a direct result to the CPI decrease is the increase in the cost of the medical care,
transportation, food and so on resulting in the public to force the declination of the
government. The corruption in the defence expenditure is very high compared to the
corruption in the public services and it is very difficult to monitor the money spent in these
spheres (HANOUSEK and KOČENDA 2012). Government’s expenditure on the defence is

4ETHICS AND SUSTAINABILITY
high as it is involved in buying of high tech military weapons internationally by different
companies and to import them, some politicians takes bribe to clear the transportation of
those products. In the public sector, government allocates money for education, recreation
and so on but because of having many middle man and local politicians who takes bribe to
complete the work along with some cut in government allocations, the end product
sometimes is more horrible than expected (Abed and Davoodi 2012). The direct negative
effect to the government for these is that people are unsatisfied with the quality of the product
they are getting and as a result they would want the declination of the present government
and the thing which does the work of oil in fire is the increment of bribery by the local
politicians of the government (HINES 2015). In other words, the corruption in the public
sector would be followed by more corruption and will result in declination of the economy
day by day in the near future. After the empirical analysis of the OECD countries for more
than 10 years till the period of 2015, on the basis of panel model by using several variables, a
chart in made to depict the corruption on the basis of Consumer Price Index (BANERJEE,
HANNA and MULLAINATHAN 2012).
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Government Spending, Corruption and Economic Growth