Cost due to corruption in both rich and developing countries is estimated at a whopping $1 trillion ($1,000 billion) a year, a World Bank Institute study has said.
Contrary to popular perception, the study revealed that 'corruption is not simply a developing country problem' and fighting the menace is a global challenge.
It said that a country with a per capita income of $2,000 a year that addresses corruption, improves its governance and the rule of law could expect to see its income rise to $8,000 in the long run. Otherwise, it will continue to be mired in poverty and squalor.
Daniel Kaufmann, the institute's director for governance, said that this $1 trillion figure is an estimate of actual bribes paid worldwide.
The $1 trillion figure, calculated using 2001-02 economic data, compares with an estimated size of the world economy at that time of just over $30 trillion, Kaufmann said, and does not include embezzlement of public funds or theft of public assets.
"It is extremely difficult to assess the extent of worldwide embezzlement of public funds, but we do know it is a very serious issue in many settings," he said.
Corruption, Kaufmann said, constitutes a major obstacle to reducing poverty, inequality and infant mortality in emerging economies.
The World bank Institute research shows that countries that tackle corruption and improve their rule of law can increase their national income by as much as four times in the long term, and child mortality can fall as much as 75 per cent, he said.
"We have found what we label as the '400 per cent governance dividend'," Kaufmann said.
Among the anti-corruption projects that are feasible, he cites the citizens' report card in Bangalore, which has resulted in an increase in citizen satisfaction with local agencies and a decline in corruption, or expenditure tracking surveys in Uganda, which led to a reduction in budgetary leakages away from local schools.
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