The cost of corruption
Vicente Humberto Monteverde
Institute of Economic Research, Faculty of Economics and Business,
University of Mor
on, Buenos Aires
Purpose –The purpose of this paper is to examine the ways for the formulationof a model for calculating
the cost of corruptionper country, taking into account the social cost.
Design/methodology/approach –The methodology is practical exploration; the model is formulated
along with the social cost of speciﬁc calculation. Based on two speciﬁc acts of corruption, bribery
and overpricing of public works, these acts are private and public corruption. From there, the model is
formulated along withthe social cost of speciﬁc calculation, based on two speciﬁc acts of corruption,bribery
and overpricingof public works.
Findings –This paper concludesthat the model is applicable to all the countries of the world, based on their
Research limitations/implications –Limitations do not exist in the model; the additionalimplications
are the extensionof the model. The modelcan be used for local governmentsor countries.
Practical implications –Countries can calculatethe theoretical cost of corruption in their local, regional
or national economies, based on two speciﬁc acts of corruption, in political, private and public corruption;
briberyand overpricing of public works.
Social implications –The social implicationsinclude knowing the theoretical cost of corruption and their
Originality/value –The model calculatesthe cost of corruption and its economic and socialimpact.
Keywords Corruption, Bribes, Surcharges, Cost of corruption
Paper type Research paper
When we study the causes and consequencesof corruption in the economy, the ﬁrst question
is the cost of corruption. Are there ﬁrm basesto calculate it?
We see, with amazement, in the news a parade of corrupt and their ill-gotten goods, for
example, houses, cars, patrimonies, bags with money, foreign currency and offshore bank
accounts hiddenabroad in protective tax havens.
This work aims to calculate the theoretical cost of corruptionfor the national state, with
its social costs, thiswould be a face of the mirror.
The other side is the utility obtained by a company through corrupt practices, these
proﬁts that are obtained, are called undue beneﬁts, it is important in this other face of the
mirror, the importancethat has in a judicial process its calculation, where the judgeshave to
determine this ﬁgure,for restitution to the public treasury.
The mirror has two faces: one, the cost of acts of corruption for the state and the
other, the undue beneﬁt obtainedby the companies through corrupt practices.
JEL classiﬁcation –A13, D73, P16
The author is grateful to his university, the University of Mor
on. Any remaining errors are the
author’s sole responsibility.
Journalof Financial Crime
Vol.26 No. 2, 2019
© Emerald Publishing Limited
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