This paper is based on the paper with the same rubric “ Corruption ” prepared by Shleifer and Vishny. In the undermentioned subdivisions you will happen an debut related to corruptness, its jobs in an economic system and how it is measured. After that a general literature reappraisal is done with the intent to denote what other writers deal with nature of corruptness, the beginnings of it, the theoretical account how it is explained and its consequence in economic system. Then, the reappraisal of the paper is represented with account in our ain words of the basic theoretical account of corruptness, two other theoretical accounts, their comparing harmonizing to industrial organisational and the chief grounds why corruptness is more dearly-won to economic development.

The last portion is related with corruptness jobs in Albania in conformity with publication of IDRA 2009 Survey for perceptual experience on corruptness in Albania, and in the terminal we will reason everything.


Corruptness is a widely spread phenomenon in many states, for many old ages. Corruptness is defined as: “ An act done with purpose to give some advantage inconsistent with official responsibility and the rights of others. It includes graft, but is more comprehensive ; because an act may be corruptedly done, though the advantage to be derived from it is non offered by another. Sometimes corruptness is understood as something against jurisprudence ; such as, a contract by which the borrower agreed to pay the loaner exorbitant involvement. It is said, in such instance, that it was corruptedly agreed, etc. ”[ 1 ]

The types of perversive behaviors are bribery, trading in influence, transplants, backing, nepotism and cronyism, electoral fraud, peculation, kickbacks, unhallowed confederation, engagement in organized offense and so on.

Despite many of the troubles of mensurating corruptness, authoritiess need to cognize the true extent of corruptness in their economic systems. One of the chief attacks to mensurate corruptness is: mensurating the Corruption Perceptive Index ( CPI ) , which is a composite index, utilizing the appraisals by hazard bureaus and studies carried out among elect business people. The CPI is an one-year index, compiled since 1995 by an anti-corruption Nongovernmental organization: Transparency International.

Because corruptness is related with a batch of other macroeconomic factors like: the size of public sector, growing of the economic system, grade of competition in the market, political influence etc, it is an of import issue in national and international degree. Corruptness has non merely effects on political relations, disposal and establishments but in economic, environmental and societal life, wellness, instruction, trade brotherhoods and so on, so measuring and cut downing it, is important for bettering establishments and holding effectual authorities policies.

Literature reappraisal

Most surveies focus on the Principal-Agent theoretical account of corruptness as the figure below represents:[ 2 ]

The principal ( e.g. main officers, policymakers, high degree administrative officials, or finally the authorities ) create regulations directed at delegating undertakings to the agent ( e.g. any public employee, such as a revenue enhancement aggregator ) . These regulations are intended to modulate exchange with a client ( e.g. the taxpayers ) . By nature of single ends be givening to differ, a struggle of involvement arises between the principal and the agent, whose has an informational advantage over the principal. So the agent can do a personal net income by taking payoffs for different goods provided from the province, personally bear downing the consumers with a different monetary value instead than the 1 decided by the principal.

In different literature reexamine the nature of corruptness is chiefly because of two grounds.

First corruptness is a failure in moralss and moral criterions of public functionaries. Second it arises from witting determinations by economically rational public functionaries that face a system of inducements and chances to prosecute in corrupt activities.

But the degree of corruptness that a public officer is motivated to prosecute in will be higher when:

aˆ? Public sector rewards are lower ( i.e. , an absolute pay consequence ) ;

aˆ? The difference between private and public rewards is greater ( i.e. , a comparative pay consequence ) ;

aˆ? The degree of personal addition is higher ( e.g. , the higher the payoff offered ) ;

aˆ? The chance of sensing ( P ) is lower ;

aˆ? The punishment ( all right, etc. ) is lower.[ 3 ]

Harmonizing to our research corruptness has a broad scope of effects in an economic system:

Corruptness reduces the economic growing by take downing inducements to put, and by take downing the quality of public substructure and services.[ 4 ]

Corruptness distorts the composing of authorities outgo and decreases the entire financess available to finance public goods and services. It is said that corruptness arise the costs of services by 30 to 50 per centum.[ 5 ]

Corruptness distorts every bit good the allotment of public resources.[ 6 ]

High-level corruptness reduces revenue enhancement gross.

Corruptness reduces most the gross from societal security revenue enhancement, so gross revenues revenue enhancement grosss ; it reduces personal income revenue enhancements least.

A one-point addition in the corruptness index reduces revenue enhancement gross collected by 2.7 per centum of GDP.

Corruptness additions revenue enhancement equivocation.[ 7 ]

It is suggested a similarity between the payoff and a revenue enhancement with a differentiation that the revenue enhancement gross is collected by the authorities instead than the administrative officials. But corruptness is more distortionary than that because being illegal implies the necessity of secretiveness. Sometimes the simplest economic illustration of financial corruptness is sing the Bribe as similar to a revenue enhancement imposed on each unit of authorities services, which increases the overall cost of having public services.[ 8 ]

Further more in some other instances corruptness, unlike a revenue enhancement, is non crystalline, non pre-announced, and carries a much poorer enforcement of an understanding between a suborner and a payoff. So it embeds arbitrariness and creates uncertainness.[ 9 ]

Paper reappraisal

Corruptness harmonizing to Shleifer and Vishny, may be dearly-won to economic development because of the undermentioned grounds. Firsts is the failing of the cardinal authorities which allows its agent to enforce private payoffs on public goods provided implying in this manner a load from the payoff, and second is the deformation entailed by the necessary secretiveness of corruptness.

4.1 Industrial Organization and corruptness theoretical account

In the paper of Shleifer and Vishny, corruptness is analyses through a basic theoretical account, and so harmonizing to the premises made two other theoretical accounts are added.

4.1.1 First basic theoretical account: There is merely one government-produced good

The basic theoretical account introduced to analyze two types of corruptness behavior, with larceny and without larceny includes the undermentioned premises:

First of all it is assumed to be merely one good provided by the authorities. This premise is really of import because in the undermentioned two other theoretical accounts this premise is changed a spot, and this alteration is reflected non merely in the industrial organisation but besides in the degree of payoff and gross collected.

The other premises are:

The good provided is homogenous with a demand curve D ( P ) as it is showed in the image below.

The good provided is sold for the authorities by an functionary, who has the chance to curtail the measure of the good that is sold. ( So the official Acts of the Apostless as a monopolizer in the supply side )

The functionary can curtail supply without any hazard of sensing or penalty.

The cost of bring forthing this good is wholly immaterial to the functionary since the authorities is paying the cost.

When seeking to measure the fringy cost two instances are distinguished:

The instance without larceny:

Harmonizing to the image below the official provide the good to the client by turning over to the authorities the official monetary value, p. The fringy cost in this instance is p ( MC = P ) . So the entire monetary value ( monetary value + payoff ) ever exceeds the authorities monetary value P.It pays the functionary to make a deficit at the official monetary value and than to roll up payoffs as a manner to unclutter the market for the government-supplied good [ Shleifer and Vishny, 1992 ] .

The instance with larceny:

Harmonizing to the 2nd image below the official provide the good to the client by non turning over anything to the authorities and concealing the sale ( so the functionary in this instance is hooking ) . The monetary value that the purchaser pays is equal to the payoff and it might be even lower that the official monetary value. So the fringy cost in this instance is MC=0, which might be more attractive to the purchasers.

Sing fringy grosss, if the functionary can non monetary value discriminate among purchasers, as a monopolizer, will put the MR=MC

Except the basic theoretical account above there are every bit good two other utmost options that regard the first premise of the basic theoretical account. Now it is non any more lone one authorities good but there are complementary goods which in the 2nd theoretical account each one is provided by one independent bureau and in the 3rd theoretical account each one good is provided by at least two authorities bureaus.

4.1.2 Second Model: There are complementary authorities good ( each one provided by one independent bureau )

In instance of complementary authorities goods the Sellerss act independently, so all the different bureaus impose independently their ain payoffs in effort to maximize their ain gross. This instance might be like independent monopolizers selling the complementary authorities good.

A joint monopolizer bureau

The theoretical account takes in consideration a joint monopolizer bureau that deals with two goods and two payoffs:

Goods: x1 x2

Monetary values: p1 p2

Fringy Costss: MC1 MC2

Bribes per unit: p1-MC1 p2-MC2

Fringy grosss: MR1 MR2

Joint monopolizer sets monetary value p1 at which: MR1+MR2 dx2/dx1 =MC1 ( 1 )

Because x1 is complement to x2 this implies that dx1/dx2 & gt ; 0 so at the optimal MR1 & lt ; MC1. So the monopolizer bureau keeps the payoff on x1 down to spread out the demand for the complementary ten 2 and therefore to originate its net incomes from payoff on x2. And for the same ground this bureau keeps down the monetary value of x2.

Mugwump bureaus

In instance of independent bureaus x1 and x2 are allocated in different bureaus, and each bureau so takes the others end product as given, so in the ( 1 ) equation dx1/dx2 is set to 0. So at bureau optimal MR1=MC1 implies the payoff per unit is higher and end product lower than in the joint monopolizer. By moving independently the two bureaus really hurt each other every bit good as the purchaser of the authorities good.

Harmonizing to the paper this job is more related to “ free entry into aggregation of payoff ” means that new authorities organisations that have the chance to make Torahs and ordinances that enable them to go suppliers of extra needed authorities goods ( permits/licences ) and bear down them consequently. This leads to the risen of payoffs boundlessly and gross revenues of bundle of authorities goods every bit good as payoffs gross to fall to zero.

4.1.3 Third Model: There are complementary authorities good ( each one provided by at least two authorities bureaus )

In this 3rd scenario each one of the several complementary goods can be provided by at least two authorities bureaus. In this instance the good can be obtained without a payoff because is an bureau ask for that the purchaser can travel to another bureau to take it. Because the collusion is hard in this instance competition between suppliers and purchaser lead payoff to zero. In this instance the market of each good is competitory.

There is a connexion between the theoretical accounts above and the industrial organisation. The first theoretical account is more relevant for monarchies like it was in authoritiess of Bourbons France, Marcos ‘ Philippines, old Communists regimes, individual Mafia while the 2nd independent monopolies is more common in bureaucratic authoritiess in Africans, India, station Communist Russia ) and the 3rd theoretical account is relevant applied in federalism US authorities.

4.2 Corruptness and secretiveness

There is a connexion between corruptness and development of a state so it is said that the more corrupted states are the poorest every bit good. Mauro [ 1993 ] uses an index of corruptness that connect the corruptness and the degree of investing by a authorities within a state. So corruptness variable is defined as “ the grade to which concern dealing affect corruptness and questionable payments ” and as Mauro finds is that from the twelvemonth 1980, states with high degree of corruptness have a lower ratio of both entire and private investing to GDP.

Corruptness is similar to gross maximising revenue enhancement, like for every goods provided by the authorities a trade good revenue enhancement is imposed. So it is hard to separate between revenue enhancements and payoffs. In instance of a monopolizer theoretical account the payoffs and revenue enhancements are precisely the same. While in multiple monopolizers payoffs are similar to revenue enhancements, except that revenue enhancement rate on different activities are set by different bureaus. Finally in the instance of federalism when legal powers compete payoff is similar to revenue enhancement every bit good.

The chief difference between payoffs and revenue enhancement is that because payoffs are illegal. Because corruptness is illegal it should be kept secret. Attempts to avoid sensing and penalty make corruptness more distortionary than revenue enhancement.

But why more corrupted states are the poorest, is linked with the maximising personal gross from administrative officials prohibit the imports of goods on which payoff can be collected without sensing, and promote imports on goods on which they can roll up bribes. As a effect the bill of fare of goods provided to consumers and manufacturers is determined by the corruptness opportunities instead than the gustatory sensations or technological demands. So hapless states spend their resources on substructure undertakings and defense mechanism, where the chances to gain form corruptness are higher.

Another of import thing sing maintaining corruptness secret is maintaining down the figure of people involved in that. So the elect must include merely a little oligarchy of politicians and business communities, and decline entry to fledglings.

“ I want either less corruptness, or more opportunity to take part in it. ”

Corruptness in Albania

Corruptness in Albania it is said that exist since the Ottoman Empire or even earlier. Related to the paper and the theoretical accounts represented we can surmise that for some authorities goods provided in Albania corruptness can be identified to the first theoretical account and for some other goods to the 2nd theoretical account.

We can state that late to avoid perversive behaviors in Albania the procedure of providing licences/permits/other paperss needed for concern and other goods provided to citizens has changed the manner of treating it particularly with the undertaking of e-government, e-procurement, e- heath, e-school and other information society undertakings with the intent to hold a more crystalline authorities. Besides the focal point of authorities is to observe and contend corruptness.

Harmonizing to IDRA, and its study done in 2009 the perceptual experience of corruptness in Albania remains high. Out of 20 establishments, 14 are considered to be more corrupt than honest and merely 6 autumn below the center of a graduated table where 0 means “ Very honorable ” and 100 agencies “ Very corrupt ” . Harmonizing to Transparency International website the CPI for Albania in 2009 is 3.2 and Albania ranked the 95 out of 182 states.

Religious leaders, the President, media, military, public school instructors and NGO leaders are perceived as least corrupt. Custom functionaries, revenue enhancement functionaries, curates, Parliamentarians and physicians, on the other manus, are perceived as the most corrupt.

Health represents the sector most quoted for graft. 37.1 % of respondents said that they had bribed a physician or nurse during the last twelvemonth.[ 10 ]

Despite the focal point of authorities and its attempt against corruptness, the degree of it in Albania is still high comparing with other states, and this possibly because of a civilization job. Due to some old wonts for an Albanian is easier to give a payoff than delay for a service. Another ground might be the fact that the statute law and regulative model is changed often so people find easier to give payoffs for public services than to larn the alterations in statute law.

Even though there exist a batch of governmental and international organic structures like Anti-corruption Task Force, High Inspectorate for the Declaration and Audit of Assets, Public Procurement Agency, Joint Investigative Unit against corruptness and economic offense etc that have the end to place and contend corruptness in Albania.


In this paper we have discussed some different literature reappraisal sing corruptness, its nature, the effects in an economic system and the similarity with revenue enhancement.

Harmonizing to paper reappraisal signifier Shleifer and Vishnny there are several theoretical accounts that relate corruptness with the industrial organisation and construction of a authorities offering a governmental good. So one of the grounds of corruptness is the weak authorities.

In more federal authoritiess where competition between different bureaus offering governmental goods is higher the payoff falls to zero, and frailty versa in other states.

Except weak organisational construction of authorities the necessity for secrecy make corruptness more distortionary than revenue enhancement.

What we found about Albania: Custom functionaries, revenue enhancement functionaries, curates, Parliamentarians and physicians, are perceived as the most corrupt in our state and the CPI index for 2009 is 3.2.

The CPI shows that is excessively much thing to make to command corruptness in Albania.

Reducing Corruption is non impossible so authorities has its ain scheme to forestall and penalize corruptness.