While on sabbatical at the University of Göttingen, I met Johan Graf Lambsdorf, whose reserach was on corruption across nations. He has been involved in compiling a Corruption Perceptions Index as part of Transparency International. This organization just came out with a report on corruption in Europe. Italy, Greece, Spain, and Portugal fared much worse than most of the other members of the euro zone. The problems they are having today may not be directly related to corrpution, but I don't think it is a coincedence either. Corruption reduces economic growth and efficiency. It discourages entrepreneurship. It can increase government spending without providing benefits. Honest government is one of the institutions needed for economic growth.
Corruption is cited in an article about India in today's NY Times as well. Food often rots while the poor go hungry. India provides subsidies to farmers to encourage more food production and sells food to the poor at prices lower than the would pay in stores. But, corruption leads to much of the food being diverted. Some poor cannot get ration cards--a bribe may be needed.
The harm to people caused by corruption is real and significant.