Economic Crime and Welfare Spending in Developing Countries

Abstract

Economic Crime (EC) is a modern problem concerning the present society and its economy all over the world but especially in developing countries (Bhusal, 2009). The term “economic and financial crime” refers broadly to any non-violent crime that results in a financial loss (UNODC, 2005). These crimes thus comprise a broad range of illegal activities, including corruption, fraud, tax evasion, counterfeiting, trafficking of human beings, drugs trafficking, money laundering, IP infringement, including data theft, Market fraud involving price fixing, Illegal insider trading, Cybercrime, and asset misappropriation among others. Bhusal, (2009) asserts further that the reasons given for the increase in economic crime include unemployment, economic backwardness, overpopulation, illiteracy, awareness of the society concerning crime and inadequate equipment of the police force and other investigation agencies.

Social reformers during many periods in American history have suggested that social welfare spending offers one means of deterring crime by providing people with adequate resources so they have less incentive to turn to crime (Johnson, et al 2007). A large body of research on modern criminality suggests that increases in police spending and improvements in employment opportunities aid in reducing crime rates. To carry out the study, only data on fraud and corruption aspect of economic crime are obtained to measure the relationships between social welfare spending and level of corruption in developing economies with particular reference to sub-Sahara Africa.

Keywords: Economic crime, welfare spending, developing countries, white collar crime, fraud