Promote Your Stuff



Welcome...


Showing posts with label economy. Show all posts
Showing posts with label economy. Show all posts

Monday, September 15, 2025

A Booming Economy Spawns Political Corruption and Impunity

Politicians become more corrupt during economic booms, not because citizens stop caring, but because good times make corruption harder to detect and less likely to be punished


Flourishing Economy

When the Economy Booms, So Do Corruption and Impunity


By  - 



Citizens in Latin America and the Caribbean often associate corruption with economic crises.  Since 2016, survey data show that individuals who believe their country’s economy has worsened are significantly more likely to say that most politicians are corrupt.  But are politicians actually more corrupt when the economy is bad, or are citizens just more sensitive to misconduct during downturns?

In a new IDB study, we explore how economic conditions influence corruption and the willingness of citizens to hold politicians accountable.  Combining theory and experimental evidence, we reveal a surprising pattern: politicians become more corrupt during economic booms, not because citizens stop caring, but because good times make corruption harder to detect and less likely to be punished.


A Theoretical Model to Test Citizens and Politicians’ Behavior


To study this phenomenon, we designed a theoretical model where citizens fund public goods through taxes, and politicians decide whether to allocate those funds honestly or siphon some off as private rent.  Citizens can then choose to punish politicians, at a personal cost, such as joining a protest or pursuing legal means, if they believe corruption occurred.

Good economic conditions are modeled as reductions in the cost of creating public goods.  This is equivalent to what happens in many countries in Latin America when local authorities receive additional funds because the price of abundant natural resources goes up or when exchange rates make it cheaper to buy inputs.  When the cost of producing public goods falls, politicians can offer more goods for the same level of taxes.  That makes it harder to detect when politicians skim money.  Moreover, citizens may be less inclined to punish them, even when they suspect foul play.


A Laboratory Experiment


To test these ideas, we ran a laboratory experiment with 800 university students in Colombia.  Participants played the roles of either citizens or politicians, making decisions across several rounds that mimicked the incentives and uncertainties of real political life.  The citizens received money with which to pay taxes, which were then transferred to the politicians.  The politicians then had to decide how much to allocate of those funds to provide public goods (and how much they could pocket).  In some rounds, the cost of producing public goods—manifested in real money—was high (bad times), and in others, it was low (good times).  Once citizens observed the public goods provided, they could decide to punish the politicians by reducing their salary if they believed the politician had been corrupt, mimicking what would happen in real life if voters decided to vote the politician out of office.   

The results were clear: corruption increased by 14% when the economy improved.  Meanwhile, the rate at which citizens’ punished politicians remained mostly stable, but their ability to detect corruption and their desire to respond to it was weakened.

One of the most striking results came from what politicians expected: they believed they were less likely to be punished during good times, and they were right to think so.  The public goods looked better, even when the politicians had skimmed off the top, and citizens were less likely to act on their suspicions.  As a result, politicians had stronger incentives to engage in corrupt behavior.

It is worth noting that because public goods are usually provided by the different levels of government (local or municipal, state or provincial, national) and citizens have a hard time disentangling who provided what, corruption can be further obscured by the actions of other levels of government.  That is, a local corrupt politician may not be voted out of office if at the same time the higher levels of government are investing heavily in the district.


Upending Assumptions About the Economy and Corruption


This study upends the assumption that corruption thrives only in times of hardship.  Instead, it shows that booms may shield misconduct by creating the illusion of competent governance.  Politicians can skim off the top without triggering alarm bells, especially when citizens are materially satisfied or politically cynical.  For policymakers, the implications are clear: oversight and accountability mechanisms are crucial even when things seem to be going well.  Transparency in public spending, citizen access to detailed budget information, and clear attribution of public goods provision (who funded what) can help make corruption more visible and accountability more effective. Otherwise, periods of prosperity may come with hidden costs—not just in money lost, but in trust eroded.

Source/Comment

Saturday, July 5, 2025

Domestic Economic Developments in The Bahamas

The Central Bank of The Bahamas -Monthly Economic and Financial Developments (MEFD) May 2025


Published: Monday June 30th, 2025


The Bahamas Economy

Domestic Economic Developments

Overview

Preliminary indications are that the domestic economy’s pace of growth moderated during May 2025, relative to the same period last year, as performance continued to move closer to their expected medium-term potential.  Tourism inflows, although at healthy levels, rose at a slower pace, owing to capacity constraints in the high value-added stopover category, albeit the cruise sector remained buoyant.  In price developments, average consumer price inflation posted a flat outturn during the 12 months to March 2025, relative to the comparative 2024 period, underpinned by reduced cost pressures from imported fuel and other goods and services.  Monetary sector developments featured a buildup in banking sector liquidity, as the accumulation in the deposit base exceeded the growth in domestic credit.  In contrast, external reserves decreased, mainly attributed to a rise in net foreign currency outflows through the public sector.

Real Sector

Tourism

Initial data indicated that during the review month, the gains tourism sector earnings slowed, as activity in the stopover segment remained constrained by accommodation capacity.  However, the cruise segment maintained its healthy pace of growth.

Preliminary data from the Nassau Airport Development Company Limited (NAD) revealed that total departure—net of domestic passenger—declined by 3.2% to 133,397 in May, relative to the same 2024 period.  Underlying this outcome, U.S departures fell by 3.7% to 113,984, and non-US international departures, by 0.6% to 19,413, vis-à-vis the corresponding period last year.

On a year-to-date basis, total outbound traffic decreased by 2.3% to 0.7 million.  Specifically, U.S departures reduced by 2.8% to 0.6 million, relative to the comparative 2024 period.  Contrastingly, non-US departures grew by 0.7% to 0.1 million compared to a year earlier.

In the short-term vacation rental market, data provided by AirDNA showed that in May, total room nights sold rose by 5.0% to 66,830 vis-à-vis the corresponding period in the prior year.  The average daily room rate (ADR) firmed for entire place listings by 10.4% to $571.89 relative to the comparative period of 2024, and by 1.3% to $189.16 for hotel comparable listings.  However, given the inventory boost, average occupancy rates for entire place listings decreased to 44.1% from 47.3% a year earlier.  Likewise, hotel comparable listings declined to 43.5% from 47.7% in the preceding year.  On a year-to-date basis, total room nights sold grew by 10.7% and the average daily rates on entire place and hotel comparable listings, by 8.6% and 3.6%, respectively.

2025/2026 Budget Communications Highlights

The Government’s Budget Communication for FY2025/2026 was presented to Parliament on May 28, 2025 under the theme “Expanding Opportunities, Island by Island”, and approved by the end of June.  The Government’s announced an agenda aimed at prioritizing enhanced food and national security, offsetting the rising costs of living, upgrading public infrastructure, protecting the environment and advancing education and employment.

In the 2025/26 Budget, the Government plans to strengthen its fiscal position by improving revenue collection efficiency to counterbalance a targeted tax relief strategy.  In this regard, the budget forecasts a revenue intake of $3.9 billion for FY2025/26, compared to the projected $3.5 billion in FY2024/25.

With regard to revenue measures, no general increase in taxes nor fees were scheduled for FY2025/26.  Measures to increase tax proceeds largely focused on enhancing collection efficiency, and bolstering tax compliance.

Heightened efforts concentrated on strengthening tax compliance from cruise liners.  Measures to improve collection efficiency include the introduction of the Frequent Visitors Digital Card (FVDC) initiative, aimed at expediting the immigration process for frequent leisure travelers arriving by private vessel or aircraft.

To increase non-tax proceeds, the Budget introduces a series of targeted fees to protect the marine environment, such as an environmental levy on seabed leases and fines for unsafe marine operations.  In addition, the Government foreshadowed the establishment of a Maritime Revenue Unit to support compliance, with expanded enforcement powers granted to relevant authorities.

Further, the Government outlined a series of tax relief measures to offset rising living costs.  Notably, a reduction in the VAT rate to 5.0% was announced for a range of essential products, such as medical and dental supplies, prescription and non-prescription drugs, and basic hygiene products.  In addition, concessions included the extension of VAT relief on building materials for religious institutions, the planned reduction or removal of customs duties for several household hardware items, and the elimination of excise duty on butane fuel used for cooking. To encourage the adoption of cleaner technology, the budget also offered duty exemptions for energy efficient appliances.

Aligning with the Government’s goal to create employment opportunities, the Budget introduced the Business Development Incentives Program Act to offer tax-related benefits to large firms investing in local job creation, training, and sustainable development.

To promote equity in the Real Property Tax system, Parliament approved that, foreign homeowners would qualify for the owner-occupied exemption on properties valued up to $300,000, with partial exemption granted after 90 days of residency and full exemption after 183 days.

As it pertains to Government spending, expenditure was projected at $3.8 billion for FY2025/26, surpassing the $3.6 billion estimate in FY2024/2025. Recurrent outlays were expected to reach $3.4 billion, vis-à-vis the $3.3 billion approximation in FY2024/2025. Capital spending was forecasted at $376.3 million, higher than the $344.5 million estimate in 2024/2025.  With regard to major expenditure measures, the Government outlined numerous planned infrastructure projects across the archipelago, inclusive of roadworks, school and clinic repairs, aviation enhancements and expansions, upgrades to water systems and improving drainage in flood-prone areas.  As it relates to public safety, the Budget included allotments to enhance emergency services infrastructure.  The Government also provisioned funds for the upgrade of law enforcement technology, the construction of new facilities and for new recruits.  For the judicial system, the Budget allocated funds to expand the Virtual Courts platform.

Targeting food security, the Budget increased the overall agriculture allocation to $35.0 million from $25.0 million. Notably, the Government planned to raise its commitments to Bahamian farmers and provision for the creation of a new Centre for Food and Nutrition Security, to drive innovation, research, and policy development.  In addition, $9.0 million was earmarked to outfit the Golden Yolk Project with new poultry housing and an egg processing facility.  Further, the Government signaled plans to support construction of hydroponic farms on several islands to modernize farming techniques.

In terms of entrepreneurship, the Government proposed allotments for targeted programs through the Small Business Development Center and the Bahamas Development Bank. For education, proposed investments include $2.6 million for the National Maritime Academy, expanded support for BAMSI and BTVI, and scholarships for university students.  Further, the Government provisioned for the launch of The Bahamas Polytechnic Accreditation and Training Hub, alongside the Upskill program, to strengthen technical and vocational pathways through paid online and in-person certification courses.

Based on the current economic outlook, the Government anticipates a fiscal surplus of $75.5 million, or 0.5% of GDP for FY2025/2026, as compared to the projected $69.8 million deficit (0.4% of GDP) for FY2024/25. Given the projections, a reduction in the direct debt charge was forecasted, alongside a decrease in the corresponding ratio to GDP.

Prices

Average consumer price inflationas measured by the All-Bahamas Retail Price Indexwas relatively flat during the 12 months to March 2025, following a 2.4% increase in the comparative 2024 period.  Contributing to this development, average costs declined for clothing & footwear, by 1.9% and housing, water, gas, electricity & other fuels, by 1.3%, after recording respective increases of 0.2% and 4.7% in the same period last year. Likewise, average prices decreased for recreation & culture, by 0.6% and restaurant & hotels, by 0.3%, following the prior year gains of 1.7% and 3.4%, respectively.  In addition, average inflation moderated for furnishing, household equipment & routine household maintenance (2.7%); food & non-alcoholic beverages (2.4%); miscellaneous goods & services (2.3%); alcoholic beverages tobacco & narcotics (1.8%); education (1.7%); and health (1.7%). Providing some offset, the reduction in average prices slowed for communications (3.5%) and transport (1.6%).

Source / View / Download Full Document


Friday, December 3, 2021

It’s a Networkers world

NETWORKING IS PEOPLE BUSINESS

By Dennis Dames


Networkers World

- You want others to connect with you, but you don’t want to return the favor.

- You want Web Marketers to link with you, but you have no desire to do the same.

- You want enterprising people to join you, but you don’t want to reciprocate.

- You want Networkers to follow you, but you don’t do likewise.

- You want Net Patrons to love, like and comment on your posts and pictures, but you don’t participate in such positively motivating, encouraging, productive and rewarding activity.

- You claim that you want to Network, but with no-one else but you.

You want to solicit for new friends, and business - but you don’t entertain friendly, and trade calls.

Who do you think you are in this People Networking Culture, Economy and World?


Source