International Fraud -- the Case Essay

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This type of international fraud occurs due to a desire to develop a climate that allows investors to benefit from the comparative advantages of countries such as Mali and Senegal (Barney and Hunt). These countries generally compete against other African states in order to attract more investors and, when the resources are insufficient to convince these foreigners, state officials engage in frauds.

4. Impact on International Business Setting

The increased levels of fraud generate a series of chain reactions upon the business setting within Senegal and Mali. First of all, they reduce general trust in the economic and political systems. This then means that foreign investors are not attracted to the region and that developmental opportunities are reduced. This in turn materializes in the lack of new jobs. It means as such that the federal authorities are unable to cash in taxes from foreign investors conducting business operations within Senegal and Mali. Consequently, the large majority of the taxes will be imposed onto the national population. Despite the increased fiscal charges that generate populous dissatisfactions, the governments will still be unable to gather sufficient money to invest in the development of the public services, such as education, healthcare or infrastructure.

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More clearly, the direct effects of fraud are: "market allocation mechanisms are distorted; human and capital resources are diverted from productive activities; and the state and its institutions are undermined. Consequently, political stability and independent economic policy are endangered" (Stasavage and Daubree, 1998). All in all, at the ends of this chain sit fraud and poverty, leading as such to the conclusion that high levels of fraud lead to poverty.

5. Conclusions

The countries of the African continent have for years struggled with national and international challenges. Despite the major improvements that have been made, fraud operations are among the highest at a global level. Illicit trade operations generate negative effects upon local businesses as well as the counties' overall international position. The high levels of corruption are pegged to the still unstable political and economic climate in Mali and Senegal (Humphreys and Mohamed). This leads to the simple conclusion that international fraud, analyzed through the lenses of both institutions as well as resources, is only possible once political stability is achieved......

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