Special Report From Frobes.com
The Most Corrupt Countries

Jack Gage, 03.20.09, 05:45 PM EDT
Chasing prosperity? Unless you're a miracle worker, steer clear of these economic sinkholes.
Corruption is on the march. In 2008, the number of countries sinking deeper into the clutches of influence peddling, bribery and scandalous business dealings outpaced improvements by a 2 to 1 margin. Countries falling by more than 10 spots outnumbered risers 8.5 to 1.

Chad leads the way down in this year's report. With a heavy reliance on foreign assistance (mostly for oil exploration and development), the Sudanese neighbor gets black marks for corruption in the ranks of government officials--not surprising given its military dictatorship has been in place for 19 years.
No. 2? The Central Asian nation of Kyrgyzstan, where president Kurmanbek Bakiyev faces mounting opposition brought to a fevered pitch by recent allegations that his administration organized the assassination of a former administration official. Others in the top 10 include Azerbaijan, Venezuela, Cambodia and Ecuador.

In terms of economic impact, the debilitating affect of corruption is tangible: More than 5% of global gross domestic product, or $2.6 trillion, was smuggled, used for bribes or stolen from taxpayers in the past year, says the World Bank in a recent report. For honest companies, moving from a low corruption climate to one where corporate and government misdeeds are more prevalent can represent as much as a 20% additional tax on top of the normal costs of doing business.

Socioeconomic risk experts at the Eurasia Group also warn of corruption's corrosive effect on foreign investment. Especially in times of sluggish economic activity--and in many developed nations, recession--the added drag of distrust on the part of investors and business owners can take a mighty toll.

"Corruption is the single greatest obstacle to economic and social development," says Fluor Corp. (nyse: FLR - news - people ) CEO Alan L. Boeckmann in the report.

Nations with the highest risk of corruption are often the desperately poor, where foreign aid and assistance can easily be transferred through back channels of oppressive regimes. As a result, the impact of corruption can extend well beyond any economic detraction to affect the quality of life for millions of citizens.
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