This citation attests to the ancient nature of corruption, which amounts
to the abuse of public office for private gain. Yet it also illustrates that
even then corruption was regarded as corrosive to the development of the
state and that specific measures were therefore needed in response. The
king’s adviser perceptively hinted at the link between illiberal trade,
bureaucratic harassment at the border, and corruption. And he understood
that corruption encompassed far more than bribery: The theft of public
revenues was explicitly addressed.
By contrast, in more recent times a revisionist view has held that
corruption may not be inconsistent with development and at time may even
foster it. in the late 1970’s, Nathaniel Left of Columbia University argued,
for example, that “corruption may introduce an element of competition
into what is otherwise a comfortably monopolistic industry.
Nobody disputes the ethical failings associated with corruption. Yet
the ambiguities about corruption, its causes, its effects, and its cures cause
many to wonder whether fighting it should be a true priority or merely
rhetorical one. Not in dispute is the fact that fighting corruption has
become a rhetorical priority. In recent years, an explosion of papers,
conferences, and newspaper articles has covered this topic. Manywritings
suggest that corruption has acquired epidemic proportions in a vast number
of countries. Civic society is clamouring to address the issue in many
places. No governmental organizations such as Transparency Intentional
provide Web sites full of information on cross country corruption indices.
Yet important questions remain unanswered. Is corruption good, bad, or
irrelevant for economic growth? Are market oriented reforms a cure for
or a cause of corruption? Should an economy achieve a certain level of
affluence before widespread corruption can be contained? What does the
most recent research and data reveal about possible answer to these
questions?
The view that controlling corruption comes about only when a country
is fully industrialized is also being challenged. While there is a correlation between a country’s level of development and the degree to with it
experiencing corruption, it is also the case that there are large variations i
the incidence of corruption among groups of countries at
development. The data goes even further: The Transparency Internation
South Africa as “Cleaner” than industrialized countries such as Gree
corruption index ranks Chile, the Czech Republic, Malaysia, Poland,
and Italy.
“Corruption apologists” argues that bribery can enhance efficiency by
cutting the considerable time needed to process permits
and paperwork,
The problem with this “speed money” argument lies in the presumption
that both sides will actually stick with the deal, and there will be
further demands for bribes. In India, one high-level civil servant who had
been bribed could not process an approval any faster given the multiple
bureaucrats involved in the process, yet he willingly offered his services to
slow the approval process for rival companies.
Viewing bribes as a mechanism for equalizing supply and demands
also misses the fact that many public goods ought not to be allocated to the
highest bidder. The aim of many social and antipoverty programs is to
allocate resources according to the needs of the recipients; this goal
subverted where bribes prevail as an allocating mechanism. Corruption
has impaired the provision of social programs to the intended targe
populations and, more generally, corruption has hurt the poor. Finally, the
supply and demand view of corruption presumes that the briber gets the
good once he has paid for it. This is often not the case, for corrupt
transactions can not be enforced through a court of law.
Bribing and rent seeking also exact a significant economic cost. Talez
is mis allocated, as the jobs with the potential to collect lucrative graft
attract people who otherwise would accept the more modest financial
rewards of truly productive occupations. Poor technological decisions are
taken by corruption bureaucrats, who tend to favor non-standard,
complex, and expensive capital intensive projects that make it easier to
skim significant sums.
Corruption is negatively associated with developmental objectives
everywhere. Opportunistic bureaucrats and politicians who try to
maximize their take without regard for the impact of such perdition on the
“size of the overall pie” may account for the particularly adverse impact corruption has in some countries of Africa South Asia, and the former
Soviet Union.
Recently, Hong Kong and Singapore and the countries that have
shifted and quickly from being very corrupt to being relatively clean.
Earlier, Britain needed many decades to improve its relatively corrupt
structures.
Yet the relative successes are ignored in this absolutist approach to the
issue: countries have managed to reduce the incidence of corruption
relatively quickly, even if they are far from rendering it irrelevant. In
addition to Hong Kong and Singapore, Bostswana is regarded as one of the
least corrupt countries; Chile, Malaysia, and Portugal have under gone
significant improvements over the past dozen years or so; and Bolivia, the
Philippines, Poland, and Uganda, to name a few, have also scored
successes recently.
The president of Ukraine, concerned about growing corruption, has
ordered various institutional initiatives to address the problem. Yet at the
same time regulations continue to proliferate. For instance, the Kiev
province recently decreed that any firm selling goods within the 14
different countries of the province must have a trading permit. No
anticorruption drive can succeed in such a policy framework.
In designing reform programs, it is important to identify the
discretionary control rights at the disposal of politicians and bureaucrats.
Typically, the main activities in need of reform are those that involve
discretion, including. •. the issuance of licences, permits, quantitative import restrictions
quotas), passports, customs and border crossing documentation, and
banking licences;
• the implementation of price controls;
• the blocking of entry to new firms and investors and the provision of
monopoly power;
• the awarding of public procurement contracts;
• the granting of subsidies, soft credits, tax exemptions and inflated
pensions and the allowing of tax evasion; exchange rates, the over invoicing of imports, and the flight of
• the imposition of foreign exchange controls resulting in multiple exchange rates the over invoicing of imports and the flight of capital
• the allocation ofreal-estate grain storage facilities
telecommunications and power infrastructure;
facilities, • the maintenance of obscure or secret budgetary accounts as well as other “leaks” from the budget to private accounts.
the discretionary application of socially desirable regulations such as
those that apply to public health and the environment; and
the maintenance of obscure or secret budgetary accounts as well
other “leaks” from the budget to private accounts.
The discretionary control rights of officials can be sharply curtailed.
A clear signal from the international community would be sent if it
withdrew financial support from egregiously corrupt countries. In
relatively corrupt countries, pressures could also be brought to bear by
pulling out from corrupt industries, since often particular sectors are
especially afflicted, and their identification is relatively straightforward.
The gas industry in some countries of the former Soviet bloc comes to
mind; there are examples elsewhere as well. Corruption in a specific
industry often relates to rules that inhibit competition; in state dominated
sectors, it results from practices that obscure procurement procedures. A
esolute and co-ordinated stance by the World Bank, the international
Ionetary Fund (IMF), and other multilateral and bilateral agencies as
well as moves by investment and export promotion agencies and banks to
withdraw support from such sectors until they become competitive and
transparent would make a difference.
A collaborative approach among all the relevant international
organizations and the member nations of the Organization for Economic
Co-operation and Development (OECD) is critical. The IMF, the World
Bank, the World Trade Organization, the Organization of American States
(OAS), the OECD, the United nations agencies, and the regional
development banks need to regard the challenge of fighting corruption as a
common development objective. The corruption issue ought to gain a
prominent place at the annual Group of Seven summits, which would send
a strong message about the industrialized countries resolve and
responsibility on this issue.
Yet, so far, corruption has mostly inspired analyses, Conferences, and
writings rather than action in the international arena. The major anti- corruption speech by the president of the World Bank at the recent
IMF/World Bank annual meetings and the OAS antibribery convention are
commendable first steps, as is the OECD’s commendation to its members
to criminalize the tax deductibility of bribery expenses. The time is ripe
for a revolution: Many emerging economies are now prepared for the
international community to deliver concrete support in the fight against
corruption. Public education efforts and training programs in investigative
journalism, accounting, and auditing can all get a boost with the
international community’s support.
0
The World Bank, which is poised to take concrete action, can also
deliver technical assistance programs to help reorganize customs
institutions, develop transparent and effective treasury departments, and
spearhead procurement and auditing reform within governments. Pilot
programs could be initiated rapidly, in collaboration with Transparency
International and domestic institutions that want to take the lead in a clean
up effort. Supporting Transparency International’s public education and
information role in publicizing individual countries track records on
corruption is also likely to have high payoffs.
Finally, international institutions should take steps to encourage
participatory approaches in these countries in order to build consensus for
anticorruption drives and associated reforms.corruption speech by the president of the World Bank at the recent
IMF/World Bank annual meetings and the OAS antibribery convention are
commendable first steps, as is the OECD’s commendation to its members
to criminalize the tax deductibility of bribery expenses. The time is ripe
for a revolution: Many emerging economies are now prepared for the
international community to deliver concrete support in the fight against
corruption. Public education efforts and training programs in investigative
journalism, accounting, and auditing can all get a boost with the
international community’s support.
The World Bank, which is poised to take concrete action, can also
deliver technical assistance programs to help reorganize customs
institutions, develop transparent and effective treasury departments, and
spearhead procurement and auditing reform within governments. Pilot
programs could be initiated rapidly, in collaboration with Transparency
International and domestic institutions that want to take the lead in a clean
up effort. Supporting Transparency International’s public education and
information role in publicizing individual countries track records on
corruption is also likely to have high payoffs.
Finally, international institutions should take steps to encourage
participatory approaches in these countries in order to build consensus for
anticorruption drives and associated reforms.