The new prime minister, Nawaz Shariff, who was deposed earlier on charges of corruption, has made corruption a principal target for reform. In Bangladesh the Awami League ousted the rival Bangladesh Nationalist Party on the grounds that party members had abused public trust while in power. Instead of public goods, such as an effective policy matrix, corrupt systems focus on the use of public authority to create private goods for regime supporters. This undermines the credibility of the government and weakens the consensus for long-term support of liberal reforms. While closing older avenues for kickbacks, liberalization can open new opportunities, like privatization deals, for corruption.
Corruption distorts the decision making of both the public and the private sectors.
Officials will work at cross-purposes with the institutions they represent, keep supplies and permits scarce, and use opaque regulations to create insecurity in order to maximize their profitable interventions. Similarly, firms must adapt management structures that maximize secrecy and idiosyncratic forms of ownership to prevent manipulation by politicians and to cope with unpredictable government bureaucracies. Business often succeeds at outwitting the regulators but at the expense of transparent practices that encourage long-term business confidence. Excessive regulation causes profit-seeking firms to break the law. Assaults on illegally accumulated wealth subject business to persistent political uncertainty, and denies business public support or a continuous, open role in policy making.