If economy a whose profit margin is 10 percent loses 500

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Would you please explain the following example for me? Thank you!

If Economy A, whose profit margin is 10 percent, loses $500 million to fraud, it must generate $5 billion of additional revenue to offset the loss; If Economy B, whose profit margin is also 10 percent, loses $200 million to fraud, it must generate $2 billion; If Economy C, whose profit margin is 5 percent, loses $100 million to fraud, it must generate $2 billion. So it is easy to see how difficult it is for countries with high amounts of corruption to ever compete with countries with low rates of corruption.

My question is : what is the point of the three examples? why these three example lead to the conclusion: high corruption country is difficult to compete with lower corruption country?? the relationship between fraud loss/profit margin and corruption?

Reference no: EM13599676

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