Grade 12 Geography Past Paper PDF

UNIT UNIT FIVE ONE There is unequal distribution of resource utilization. Large proportions of the world populations are consuming too little, particularly less developed countries. In 2015, approximately 10% of the world’s population (736 million) lived in extreme poverty with incomes of le...

UNIT UNIT FIVE ONE There is unequal distribution of resource utilization. Large proportions of the world populations are consuming too little, particularly less developed countries. In 2015, approximately 10% of the world’s population (736 million) lived in extreme poverty with incomes of less than $1.90 per day. In 2017, 821 million people were malnourished, an increase in the number reported malnourished compared with 2016. In addition, rising inequality resulted in increasing polarization of society. Therefore, the weakness of the real world process is complicating the problem and challenging the sustainability of the resource utilization. The welfare of the citizen is also endanged. This unit therefore deals with the related socioeconomic issues such as multiple faces of poverty, globalization, the growing imbalance of regions and countries, corruption, and global health crises. There is an urgent need for further economic development to lift people out of poverty. 5.1. Multiple faces of poverty and implication to development At the end of this section, you will be able to: „ identify the causes of poverty and their link to economic development; and „ explain the relationship between conflict and poverty. KEY TERMS: Absolute poverty, Relative poverty, income security, opportunity, empowerment Brainstorming Activity 5.1 Attempt the following question individually and then share with your classmates. 1. How do you express poverty in your local context? What are the main dimensions and indicators of poverty? 5.1.1. Concepts of Poverty Poverty is generally considered to be a measure of deficiency of the basic needs that a person, household or community required to meet as a basic standard of living. This deficiency can be measured either in terms of a lack of resources such as income, assets, capabilities (e.g. skills, knowledge, technology or both). Basically poverty could be divided into two much known division; absolute and relative poverty. Absolute poverty is when household income is below a certain level, which makes it impossible for the person or family to meet basic needs of life including food, shelter, safe drinking water, education, healthcare, etc. 124  Challenges of Economic Developmnet In this state of poverty, even if the country is growing economically it has no effect on people living below the poverty line. Absolute poverty compares households based on a set of income level and this level varies from country to country depending on its overall economic conditions. Relative poverty is when households receive 50% less than average household incomes, so they do have some money but still not enough money to afford anything above the basic need. This type of poverty is, on the other hand, changeable depending on the economic growth of the country. 6 Relative poverty is sometimes described as “relative deficiency” because the people falling under this category are not living in total poverty, but they are not enjoying the same standard of life as everyone else in the country. It can be expressed in terms of having internet, clean clothes, a safe home (a healthy environment, free from abuse or neglect), or even education. 6 Relative poverty can also be permanent, meaning that certain families have absolutely no chance of enjoying the same standards of living as other people in the same society currently have access to. They are basically “trapped” in a low relative income box. When the relative approach is used to measure poverty, there is another concept that needs to be explored, namely, persistent poverty. This is when households receive 50 or 60% less income than average incomes every 2 out of 3 years. Since long-term poverty has more impactful consequences on economic and social conditions, persistent poverty is an important concept to bear in mind. There are also other measures of the dimensions of poverty and their indicators used in different researches works (Table 5.1). Table 5.1. The selected dimensions and indicators Dimension Indicator Income Net income per capita Education Child school attendance & adult illiteracy Health care Health service, health status & health insurance Access to social Electricity, drinking water, toilet, cooking services fuel, transportation & housing Social security Work status, pension insurance, consumer durables & social insurance 125  UNIT UNIT FIVE ONE 5.1.2. Causes of Poverty The causes of poverty is divided into two parts. These are the structural reasons of poverty as well as the behavioral or cultural explanations for poverty. The structural approach points to systemic reasons for poverty: such things as racial and gender discrimination embedded in our markets and institutions; the profit motive and consequent low wages making it difficult for some families to escape poverty; and the failure to invest sufficiently in education, health care, and social insurance. According to this view, all of these factors reduce opportunity and increase economic insecurity. The failure to correct and accommodate the natural differences between people results in an uneven playing field and promotes the creation of poverty. Structural approaches to poverty point to patriarchy, capitalism, white privilege, and racism as the fundamental causes of most of the poverty in Western economies. Thus, the structural approach has come to be associated with those on the political left. Behavioral or cultural approach: Without dismissing the fact that our structures, institutions, and systems might help explain poverty, especially the enabling of poverty, there are other researchers who emphasize culture, behavior, and personal differences as the source of much of the poverty that we observe in modern societies. Their argument is that there is a poverty culture or a set of attitudes and behaviors that tends to get passed along from parents to children and tends to perpetuate bad, self-defeating decisions, and hence poverty. Those attitudes (fatalism and the rejection of common societal norms like hard work, rationality, and non-violent dispute resolution) make many of the poor less attractive in the labor and marriage market and less capable parents. This perspective does not suggest that it is easy for low income people to resist these attitudes, but insists that each person has free will and is ultimately responsible for their own life. The behavioral or cultural approach to explaining poverty is typically favored by those who describe themselves as conservative or libertarian. Examining the features emphasized by poor people is one approach to examining the causes of poverty. Some of these features are: Lack of income and assets to attain basic necessities food, shelter, clothing, and acceptable levels of health and education. Sense of voicelessness and powerlessness in the institutions of state and society. Vulnerability to adverse shocks, linked to an inability to cope with them. 126  Challenges of Economic Developmnet To understand the determinants of poverty in all its dimensions, it is helpful to think in terms of people’s assets, the returns to (or productivity of) these assets, and the volatility of returns. These assets are of several kinds: Human assets, such as the capacity for basic labor, skills, and good health. Natural assets, such as land. Physical assets, such as access to infrastructure. Financial assets, such as savings and access to credit. Social assets, such as networks of contacts and reciprocal obligations that can be called on in time of need, and political influence over resources. As stated clearly in various literatures, poverty mainly caused by labor market issues, education, demographic characteristics (age and family structure), race, poverty-related policies and cultural factors. 5.1.3. Relationship between Conflict and Poverty There is increasing recognition among researchers, social activists as well as policy-makers that violent conflict and poverty are inter-linked. In some instances, poverty can be identified as a factor directly contributing to conflict and in other instances conflict could be seen as creating poverty. Poverty has traditionally been a concern of development. Violent conflict on the other hand has been considered a peace and security issue. It is only relatively recently that these idea have begun to converge around the issue of violent conflict and poverty. The literatures on conflict and chronic poverty to examine three hypotheses of relationship: 1. Conflict causes poverty 2. Poverty causes conflict 3. Resource wealth causes conflict Conflict causes poverty There is some consensus around the proposition that conflict causes poverty. Recently however, partly due to the problems of getting reliable data, there have been mainly descriptive accounts of the costs of conflict. The direct impacts including battlefield deaths, disablement and displacement have long-term costs for societies. Chronic poverty is likely to increase due to higher dependency ratios caused by an increased proportion of the old, women and disabled in the population. In a global analysis of conflict affected countries found similar patterns of macro-economic effects including a fall in GDP per capita, food production and exports, a fall in gross investment, government revenue and expenditure. War can lead to entitlement collapse and famine. Drawing upon the literature on famine and conflict, one can distinguish a continuum from vulnerability to external shocks to starvation and death. 127  UNIT UNIT FIVE ONE Therefore a sole focus on destruction, poverty and people as victims provides only a partial reading of war. But it has outlined the political, economic and social dimensions of conflict which are likely to have an impact on chronic poverty. Moreover, the protracted, collapsed-state conflicts are likely to lead to intergenerational exclusion and chronic poverty. Poverty causes conflict The hypothesis that poverty causes conflict is more contentious. Currently, conflicts are multi causal with a range of short term and long term factors coming into play, including a sudden economic slowdown in the face of rising expectations, external shocks and state crises. Isolating and weighting the different ‘risk factors’ is difficult. Is poverty a permissive or causal factor? Is it a structural cause, a trigger or an accelerator of violent conflict? Searching for root causes may have limited value given the capacity of conflicts to mutate over time. Few would argue for a deterministic link between poverty and conflict and the challenge is to understand how poverty may interact with a range of other factors in certain contexts and at certain times to produce violent conflict. A body of empirical work has emerged which examines poverty’s role as one of a number of causal factors behind violent conflict. Resource wealth causes conflict Recent research works of the World Bank questions the view that conflicts are driven by grievance. The study also argues that popular perceptions are shaped by the discourse which conflicts themselves generate. War cannot be fought just on hopes and hatreds. Civil wars occur when rebel organizations are financially viable. Therefore it is the feasibility of predation which determines the risk of conflict. Rebellion is motivated by greed, so that it occurs when rebels can do well out of war. Reflective Activity 5.1 1. How can you express poverty that isn’t based on a monetary indicator? Use a real-life case study from your region to demonstrate this. 2. Arrange a small group discussion in the classroom about how government policies impact a country’s increasing pattern of multilayered poverty. Have you noticed any attempts in your area? 3. What criteria do you use to assess it? 128  Challenges of Economic Developmnet 5.2. The Advantages and Limitations of Globalization At the end of this section, you will be able to: „ describe the interrelationship of globalization and economic development in developing countries; and „ explain the advantage and disadvantage of globalization. KEY TERMS: Multinational Corporation, mass media, global south, global north Brainstorming Activity 5.2 1. Is economic globalization a new form of imperi- alism, or does it encompass the entire world? 5.2.1. Basic concept of globalization Globalization has become one of the world's most contentious issues, the idea has been defined in a various ways, but the following is the most common one. Globalization is the process through which the world becomes more linked as a result of greater commerce and cultural interaction. Globalization has increased the production of goods and services. The biggest companies are no longer national firms but multinational corporations with subsid- iaries in many countries. Globalization has been happening for hundreds of years, but it has accelerated dramatically in the last half century. Currently the term itself is used to describe the trend towards countries joining together economically, through politics, and education. Coun- tries joining together economically view themselves not just through their national identities, but as part of the world as a whole. Figure 5.1. The network of the global interaction 129  UNIT UNIT FIVE ONE However, a wide range of negative connotations were also given to globalization particularly in the context of developing countries. Local businesses and brands in developing nations can go bankrupt as huge corporations in developed nations can dominate the economy of their country. Local traditions and cultures may change. People in poor counties may no longer wear their cultural costumes as they would want to look like the stars in Hollywood. More and more schools in developing nations are teaching their students how to speak this global language etc. Globalization, thus, has many benefits and disadvantages and they are here to stay. Basically, the developed world has benefited from globalization, as they can sell more goods and products to on the global South. 5.2.2. Globalization and Developing Countries Globalization in the developing countries is manifested in the following three important fields such as economic and trade processes, education and health systems and culture effects. Economic and Trade Processes Field: Globalization helps developing countries to deal with the rest of the world to increase their economic growth, solving the poverty problems in their country. In the past, developing countries were not able to tap on the world economy due to trade barriers. They cannot share the same economic growth that developed countries had. However, with globalization the World Bank and International Management encourage developing countries to go through market reforms and radical changes through large loans. Many developing nations began to take steps to open their markets by removing tariffs and free up their economies. The developed countries were able to invest in the developing nations, creating job opportunities for the people. For example, rapid growth in India and China has caused world poverty to decrease. However, countries in Africa still have the highest poverty rates, in fact, the rural areas of China which do not tap on global markets also suffer greatly from such high poverty. On the other hand, developed countries set up their companies and industries to the developing nations to take advantages of low wages and this causing pollution in countries with poor regulation of pollution. Furthermore, setting up companies and factories in the developing nations by developed countries affect badly to the economy of the developed countries and increase unemployment. Education and Health Systems: Globalization contributed to develop the health and education systems in the developing countries. We can clearly see that education has increased in recent years, because globalization has a catalyst to the jobs that require higher skills set. This demand allowed people to gain higher education. Health and education are basic objectives to improve any nations, and there are strong relationships between economic growth and health and education systems. 130  Challenges of Economic Developmnet Through growth in economic, living standards and life expectancy for the developing nations certainly get better. With more fortunes poor nations are able to supply good health care services and sanitation to their people. In addition, the government of developing countries can provide more money for health and education to the poor, which led to decrease the rates of illiteracy. This is seen in many developing countries whose illiteracy rate fell down recently. It is truth that, living standards and life expectancy of developing countries increase through economic gains from globalization. An important drawback of globalization is, globalized competition has forced many minds skilled workers where highly educated and qualified professionals, such as scientists, doctors, engineers and IT specialists, migrate to developed countries to benefit from the higher wages and greater lifestyle prospects for themselves and their children. This leads to decrease skills labor in the developing countries. Culture Effects: Globalization affected the developing countries culture in various ways. Not few cultural traits have been enormously changed through globalization, as the people are simply imitating others cultures like America and European countries. On the other hand, many developing countries extreme dependence and emphasis to globalization might lead to destroying of their own culture, tradition, identity, customs and even their languages. It was witnessed in some Arab countries (Iraq, Syria, Lebanon and Jordan) their cultures have been affected negatively. A kind of clothes they wear and a sort behavior they show are totally changed. Furthermore, globalization leads to disappearance of many words and expressions from local languages because many people use English and French words. In addition, great changes have taken place in the family life, young people are trying to leave their families and live alone when they get 18 years old. As a result the extended family tends to become smaller than before. This kinds of changes are also observed in many urban areas of Ethiopia. Figure 5.2 shows the main actors, processesthey follow and benefits of globalization. Figure 5.2. Actors, processes and benefits of Globalization 131  UNIT UNIT FIVE ONE 5.2.3. Advantages of Globalization Globalization increases free trade: Globalization has increased the free trade between countries. The increased capital liquidity has allowed investors in well developed nations to invest in developing countries. Huge corporations from developed nations have great flexibility to operate in other countries. Global mass media ties the world together: The increased flow of communication has allowed global mass media to tie the world together. Besides, global mass media has allowed vital information to be shared between corporations and individuals around the world. Globalization has also contributed to greater speed and ease of transporting goods and people. Eradicates Cultural Barriers: Countries joining together economically, through politics and education have reduced and can even eradicate cultural barriers, and increase the global village effect. Globalization has proven to be the medium for the spread of democratic ideals to well developed nations and greater independence to developing countries in the Global South. Reduction of War: Reduction of war between well developed nations is probably one of the primary benefits of globalization. The following is a list of benefit that could be gained from globalization, both by the countries of global south and north. „ Increased free trade between nations, „ Increased liquidity of capital allowing investors in developed nations to invest in developing nations, „ Corporations have greater flexibility to operate across borders, „ Global mass media ties the world together, „ Increased flow of communications allows vital information to be shared between individuals and corporations around the world, „ Greater ease and speed of transportation of goods and people, „ Reduction of cultural barriers increases the global village effect, „ Spread of democratic ideals to developed nations, „ Reduction of likelihood of war between developed nations, and „ Increases in environmental protection efforts in developed nations. 5.2.4. Disadvantages of Globalization Decreased environmental integrity: Globalization has the potential to decrease environmental integrity as polluting corporations from well developed countries can take advantage of developing nations weak regulatory rules. 132  Challenges of Economic Developmnet The seek for cheap labor: Globalizations increases jobs for non-skilled and skilled peoples of the developing nations as huge corporations of developed countries seek for cheap labor. This condition also creates further inequality between developed and developing countries. Thus the economic trend can also increase the likelihood of economic disrupt in a single nations, which could affect all nations socioeconomic condition, particularly in the impoverished developing nations. Limits cultural expressions: Globalization imposes limits on free expression as most of the mass media tends to be controlled by huge corporations. This means that mass media can be used by handful corporations to pose risks in the cultural heritage of both well developed and developing nations. The following are some of the general disadvantages of globalization. „ Increased likelihood of economic disruptions in one nation effecting all nations, „ Corporate influence of nation-states far exceeds that of civil society organizations and average individuals, „ Threat that control of world media by a handful of corporations will limit cultural diversity, „ Greater chance of reactions for globalization being violent in an attempt to preserve cultural heritage „ Greater risk of diseases being transported unintentionally between nations, „ Spread of a materialistic lifestyle and attitude that sees consumption as the path to prosperity, „ International bodies like the World Trade Organization infringe on national and individual sovereignty, and „ Increase in the chances of civil war within developing countries and open war between developing countries as they vie for resources. Globalization is a global economic trend that is here to stay. It has advantages and disadvantages, and these things will not disappear. People just need to know how to reap its benefits and reduce its risks. People must understand its impact globally, and work altogether to remedy the problems that may arise in the future. All countries in the Global North and Global South must work altogether to spread its benefits. 133  UNIT UNIT FIVE ONE Reflective Activity 5.2 Critically think back about what you have learned in this unit and complete the following questions first in- dividually and then share with your groups 1. Can you find an element of globalization in your locality? 2. How do you evaluate it? Disuses in your class. 3. Organize the class to undertake a collab- orative learning on the impact of global- ization on developing countries by taking Ethiopia as an example. 5.3. The growing imbalance between regions and countries At the end of this section, you will be able to: „ demonstrate why and how trade imbalance occurs between developing and de- veloped countries; and „ evaluate the level of countries or regional inequalities. KEY TERMS: per capita GDP, trade balance, McLoone Index, Gini Coefficient and Lorenz Brainstorming Activity 5.3 Attempt the following question and reflect your idea to the teacher. 1. Is the economy of countries getting more balanced or imbalanced as time passes? Please explain why you choose each side of your response 5.3.1. The concept of economic inequality between regions and countries The idea of inequality is both very simple and very complex. At one level it is the simplest of all ideas and has moved people with an immediate appeal hardly matched by any other concept. At the same time, is a very complex notion that has been the subject of much research outputs by philosophers, statisticians, political theorists, sociologists and economists. From the ancient period to the present, theories have seen trade as a key instrument in determining the trend of regional and country economic inequality. Both the convergence and divergence hypotheses take it into account with their distinct assumptions and methodologies. The available evidence on trends in global economic inequality comes mainly from two types of studies. Studies of the first type have been concerned with empirically testing the catching- up or convergence hypothesis. This states that less developed countries and regions should be expected to grow faster than more developed ones. 134  Challenges of Economic Developmnet The hypothesis clearly refers to what we have called inter-country inequality and proposes that we should expect this to decline over time. Three main arguments have been advanced in support of the hypothesis. First, the latecomers into the world of modern economic growth enjoy an advantage because they can simply adopt and exploit technologies, which the pioneers had to develop through their own efforts. Second, assumption reflects there are diminishing returns to inputs factor. This implies less developed economies have an advantage of low production cost because of low labor wage and the price of other factor input. Thus, for equivalent rates of investment, the less developed economies should be able to achieve higher growth. Third, the shift of large amounts of labor from farm to industry boosts labor productivity in general. The importance of this source of productivity growth, however, declines with development as productivity tends to equalize across sectors and activities, and fewer and fewer workers remain in low-productivity Nevertheless, widening income inequality is the defining challenge of our time. In advanced economies, the gap between the rich and poor is at its highest level in decades. Inequality trends have been more mixed in emerging markets and developing countries. Thus, the Second view investigates the divergent trends in inequality developments across advanced economies and developing countries, with a particular focus on the poor and the middle class. The pro-divergent notion primarily highlighted the rationale for this divergence as the countries' current experience. They practically demonstrate a diverging pattern of inequality. The follow- ing are some of the evidences that support the greater divergent pattern of inequality. Inequality has been exacerbated by technological development and the associat- ed increase in skill, as well as the collapse of various labor market institutions in both advanced economies and developing countries. The growing skill premiums are related with expanding income inequalities in advanced nations, whereas financial deepening is associated with rising inequality in developing countries. 5.3.2. Cause and effect of trade imbalance An important indicator of regional and national inequality is measuring the trade balance. A trade imbalance occurs when the cost of a country's imports exceeds the cost of its exports. It is one approach to measure international commerce, and it's also known as a negative trade balance. A country's trade deficit may be calculated by subtracting the entire value of its exports from the total value of its imports. The major causes and effect of this imbalance are stated below. 135  UNIT UNIT FIVE ONE Causes: A trade imbalance happens when a country does not produce what it requires and must borrow from other countries to pay for imports. This is referred to as a current account deficit. A trade deficit also occurs when companies manufacture goods in other countries. The raw materials for manufacturing that are shipped overseas for factory production count as an export. The finished manufactured goods are counted as imports when they're shipped back to the country. The imports are subtracted from the country's gross domestic product even though the earnings may benefit the company's stock price, and the taxes may increase the country's revenue stream. Effects: A trade can enhance a country's standard of living since citizens can access a broader range of goods and services at a lower cost. It can also reduce the threat of inflation since it creates lower prices. However, a trade imbalance may result in more job outsourcing to foreign countries over time. As a country imports more goods than it buys domestically, then the home country may create fewer jobs in certain industries. At the same time, foreign companies will likely hire new workers to keep up with the demand for their exports. 5.3.3. Measurement of countries and regional inequalities Economic inequality, in this context, measures the inequality between a percentage of population and the percentage of resources (such as income) received by that population. Inequality studies explore the levels of resource disparity and their practical and political implications. Though there are number of measures, the most often used metrics for evaluating global economic disparity is per capita GDP. The major characteristics or features that were considered in such assessment are listed below. „ Physical attributes – distribution of natural ability is not equal „ Personal Preferences – Relative valuation of leisure and work effort differs „ Social Process – Pressure to work or not to work varies across particular fields or disciplines „ Public Policy – tax, labor, education, and other policies affect the distribution of resources. Most people believed that economic disparity in Africa was quite modest and, at best, wasn't a significant barrier to reducing poverty until recently. Mostly because they are all generally impoverished. However, there was a general sense of concern when it was found that inequality in Sub-Saharan Africa was among the greatest in the world. The discrepancy can be seen in both income and non-income circumstances. 136  Challenges of Economic Developmnet Income inequality of sub-Saharan Africa is one of the most unequal, despite low levels of per capita income. Inequalities in non-income dimensions of welfare are also high, particularly between men and women and between regions, and have remained persistent over time. Furthermore, although income inequalities are typically more of an urban phenomenon, asset- based and capability-based inequalities in fact tend to be higher in rural than urban areas. In countries where there is a significant initial income difference, economic growth is less effective at alleviating poverty. Economic expansion and inequality reduction must go hand in hand to significantly reduce poverty. Figure 5.3, which is based on data from the World Bank gathered between 2011 and 2018, shows the level of inequality in a chosen number of sub- Saharan African countries. According to the data, a country's index value rises when levels of economic disparity among its citizens’ decline. Figure 5.3: Selected Africa Country Ranking in inequality (World Bank estimate of GINI index) Take for example; countries like S. Africa and Guinea as cases, the inequality that exists in these countries.A Gini coefficient of 0 reflects perfect equality, where all income or wealth values are the same, while a Gini coefficient of 1 (or 100%) reflects maximal inequality among values 5.3.4. The Widening current global imbalance Measures of inequality based on GINI coefficients of gross and net incomes have increased substantially since 1990 in most of the developed world (see figure 5.8). Inequality, on average, has remained stable in developing countries, Although at a much higher level than observed in advanced economies. However, there are large disparities across developing countries, with Asia and Eastern Europe experiencing marked increases in inequality, and countries in Latin America exhibiting notable declines (although the region remains the most unequal in the world). 137  UNIT UNIT FIVE ONE During 1990–2012, market income inequality in advanced economies increased by an aver- age of 50 GINI points compared to a 3 GINI point increase in the net GINI coefficient. Figure 5.4: Income inequality Gini coefficient of the world 2019 Reflective Activity 5.3 Arrange a small group discussion in the classroom to look at: 1. Why some countries with abundant natu- ral resources remain destitute, while others are becoming more prosperous while hav- ing less natural resources. Conduct a debate on the role of poor and rich coun- tries in bringing about global trade imbalance. 5.4. Corruption At the end of this section, you will be able to: „ explain the different type of corruption; and „ demonstrate how corruption affects economic development by taking concrete examples. KEY TERMS: Bribery, patronage, petty corruption, grand corruption and Corruption Perceptions Index. 138  Challenges of Economic Developmnet Brainstorming Activity 5.4 Students, please attempt the following question individ- ual and then share with your classmates. 1. Do you think that corruption is one of the major factors that hamper the growth of your country? 2. Discuss why or why not depending on your response. 5.4.1. The Concept of Corruption Currently critical geography examines corruption as an objective collection of deviant actions predominantly affecting states, particularly in the Global South. It also illustrates how corruption explanations get politicized and interrelated with material, and geographical power regimes. For instance, urban informality is regarded as a significant linked issue in both the North and South. The term corruption involves a wide range of behaviors differing in their causes and effects in different spatiotemporal contexts. Corruption may be defined in different ways, occurs in varying levels of severity, and takes various forms in time and space, depending on local political cultures and institutional frameworks. There is no one single definition of corruption that can be applied to all circumstances, for example, corruption can be petty or large-scale, systemic or occasional, implicit or explicit, committed by individuals. Similarly, corruption defined as the abuse of entrusted power for private gain. It also more commonly defined as evil, a disastrous personal failing. Legally, however, judicial systems punish acts, not character. In this view, corruption is a source of injustice and inequality. Corruption is simultaneously a political, economic, legal, and moral phenomenon. The relationship between corruption and economic growth has been debated. Many studies have found evidence that corruption has harmful effects on economic growth. Corruption shows a negative correlation with economic growth after controlling for institutional efficiency. Furthermore, corruption causes uncertainty for investors and raises investment risk in nations with high levels of corruption. 5.4.2. Types of corruption Corruption can be categorized in various dimensions to facilitate the understanding of how corruption affects economic performance. The concept includes three broad categories of human action; bribery, theft of public assets, and patronage. 139  UNIT UNIT FIVE ONE Bribery is the most familiar among corrupt processes. It consists of payments by individuals or firms to public officials in order to influence administrative decisions under their responsibility. Bribery covers a wide range of administrative decisions, determined by the scope of government regulations and activity. It frequently overlaps with the other two corruption categories through the collusion of briber and bribe. Theft of public assets can occur as unilateral embezzlement by public officials or through the collusion of public officials and private agents. Apart from the illegal transfer of real or financial public assets at below-market prices, it includes evasion of taxes and other legal payments to the public sector, as well as diversion of public funds from their intended use into private pockets. Corruption in the form of patronage (sometimes called favoritism, nepotism, clienteles) consists of the preferential treatment of firms and/or individuals by public officials regarding the compliance with government rules for the allocation of government contracts or transfer payments. The private sector counterpart consists of “special favors” in the form of financial rewards or professional opportunities granted to the public official involved. Another distinction is that an act of corruption, which can be characterized by the value of the transaction concerned. Although this is a continuous variable, the analytical distinction usually made is between low value (“petty”) and large value (“grand”) corruption. Typically, the larger the value of the corrupt transaction, the higher the position in the public hierarchy of the public official(s) involved. Various combinations of the characteristics detailed above have given rise to specific types of corruption. Thus systematic theft at a grand scale by high public officials is called “kleptocracy”, while systematic patronage with large stakes has been labelled “crony capitalism” or “government capture”. “Kick-backs” describe acts of bribery that involve theft of public assets or patronage. 5.4.3. Geography of Corruption Corruption has got a geographical essence because social processes are always distributed unevenly across space. The causes, nature, and consequences of corruption differ from place to place, depending on the context of historical, cultural, legal and political organization. The incidence of corruption is difficult to determine empirically because its committers are often adept at keeping it hidden. 140  Challenges of Economic Developmnet Analyses of corruption in different regional contexts rely heavily on the corruption indicator of Transparency International, which is a global nongovernmental organization dedicated to monitoring and combatting public and private sector corruption. The group is involved in a variety of tangled activities, including measuring corruption, exposing inexcusable cases, offering advice to companies to minimize corruption, and developing tools for combatting it. The organizations produce annual corruption report with Corruption Perceptions Index (CPI) of government misconduct, issued since 1995. The CPI is a composite indicator based on surveys and interviews with public and private sector officials in each country and expert assessments by 13 sources, including the different global, regional and national organizations. A minimum of three of these units contributed to the assessment of corruption in each country. Scores were normalized on an ordinal scale of zero (most corrupt) to 100 (least corrupt). Table 5.3 provides an overview of how the magnitude of corruption varies over the world. Only a very small number of countries (including Canada, Singapore, Australia, and New Zealand) have relatively uncorrupt governments, with CPI numbers of 80 or higher; however, this groups comprises a minuscule 1.7% of the world’s population. A secondary tier of slightly corrupt states (indices of 60–79), including several European countries, the United States, Japan, Botswana, Israel, Taiwan, and the United Arab Emirates) includes an additional one- eighth of the planet. Moderately corrupt governments (scores of 40–59) include a diverse array of European, African, Middle Eastern, and a few Asian states such as South Korea. By far the largest group almost three-fourths of humanity consists of very corrupt governments: 82 states with scores ranging between 20 and 39 account for more than 5.2 billion people. By this measure, corruption is the norm in most societies in the world. Finally, a small group of 14 states with scores below 20 may be said to be extremely corrupt; this group includes “failed states” such as Somalia, Afghanistan, and Yemen, which are incapable of delivering basic public services as well as several with long histories of extreme poverty (Haiti), war (Iraq), and totalitarian governments (Uzbekistan, Turkmenistan, and North Korea). Fortunately, this group includes less than 2% of the world’s population. 141  UNIT UNIT FIVE ONE Table 5.3. The world’s population distribution by degree of state corruption, 2016 Level of corruption Corruption Population % of index (million) world pop. Least corrupt >80 118.6 1.7 Slightly corrupt 60–79 854.4 12.0 Moderately corrupt 40-59 694.2 9.7 Very corrupt 20-39 5210.2 72.9 Extremely corrupt