Baker Hughes Case Study

1039 Words5 Pages
Baker Hughes: Foreign Corrupt Practices Act Study Questions 1. Describe the economic and social impact of bribes and other similar payments in emerging economics. In emerging economies, bribes and other similar payments have a negative impact. Such corruption, although appearing to provide short term growth, will not turn into long term growth. Corruption reduces the efficiencies of the operations of the market economy and a loss of direct foreign investment in countries where participation in corruption is how business is done. Politicians and government officials worldwide receive bribes valued between $20 billion and $40 billion annually. Companies that participate in bribing can face reputational damage and loss of investors. According to the World Bank, 0.5% of GDP is lost due to corruption each year. Corruption makes the poor poorer. In terms of social impact, corruption causes the rich to become richer and the poor to become poorer as a general trend. This causes an increase in social divisions and conflict between the socioeconomic groups. Corruption also causes division among various ethnic groups as people become bitter, suspicious, jealous and distrusting. 2. Is the “optimal” amount of bribery payments for a country equal to zero? Yes, the optimal amount of bribery payments for a country is equal to zero. Since bribery and corruption have long term negative impacts, and optimal means the most favorable, it is the most favorable option for a country to have zero bribery payments. By having zero bribery payments, a country will in theory not be subject to any of the negative impacts of bribery. 3. Should the board of directors be actively involved in policing foreign corrupt practices or is this a management issue? It is also the responsibility of the board of directors to be involved in policing foreign corrupt
Open Document