Bribery, extortion and misappropriation in public sector activities have insidious consequences, especially in developing nations. This type of corruption distorts markets and competition; breeds cynicism among citizens; stymies the rule of law; damages government legitimacy; corrodes the integrity of the private sector; undermines development; and impairs poverty reduction.
Corruption also helps perpetuate failed, failing and fragile states which may be incubators of terrorism, the narcotics trade, money laundering, human trafficking and other types of global crime.
The ultimate goal in combating corruption is to create durable, transparent and accountable institutions in developing nations which can order fundamental economic, political, administrative and legal affairs free from illicit influences. A variety of strategies can support achievement of this goal.
- Private corporations, especially in the developed world, should voluntarily adopt anti-bribery programs which prevent improper payments in the developing world.
- The developed world, through the 1999 OECD Convention on Combating Bribery of Foreign Public Officials, has enacted laws which make foreign payments a crime for major multinationals headquartered in the major industrialized exporting nations. These laws are intended not just to prosecute single instances of wrong-doing but to pressure corporations to create durable effective programs, not just voluntarily but under threat of law.
- Multi-lateral Development Banks, such as the World Bank, and development agencies in individual industrialized nations (like U.S. AID or the UK's Department for International Development) fund projects for institutional "capacity building", while also seeking to ensure "program integrity," i.e. that their funds are not siphoned off for illicit purposes by governments or contractors.
- The developing world nations themselves can engage in "institution-building", although each nation will be different given history, culture, economy, politics and current leadership.