In an earlier blog post, we commented on the sources of corruption, the factors that have turned it into a powerful obstacle to sustainable economic development. We noted that the presence of dysfunctional and onerous regulations and poorly formulated policies, often created incentives for individuals and businesses to short-circuit them through the paying of bribes. We now turn to the consequences of corruption, to better understand why it is a destroyer of human prosperity.
Crony capitalism is the key development challenge facing Tunisia today
Last week’s Economist magazine focused on Crony Capitalism. From the powerful oil barons in the USA in the 1920s to today’s oligarchs in Russia and Ukraine, they show that such entrenched interests have been a major concern over time and around the globe. North Africa is no exception. The fortunes accumulated by the family and friends of President Zine Al-Abidine Ben Ali of Tunisia and Hosni Mubarak of Egypt were so obscene that they helped trigger the Arab Spring revolutions, with protestors demanding an end to corruption by the elite.
Digital technology means development is now happening outside the system
I recently spent an evening at the University of Sussex talking to students interested in a career in the international development and non-profit sectors. That might not sound particularly interesting at first, except that I've never had a job in either. There's a general assumption – and not an unreasonable one – that if you want a career helping solve some of the bigger challenges facing people and the planet that you reach out and volunteer, intern and work at some of the largest institutions taking on those problems. But there is another way. A few decades ago, if you wanted a career in development you'd have to be a teacher, doctor or build dams. The spread of the internet and the march of the mobile phone have changed all that. Now, anyone with a computer and internet connection can build an app in their bedroom that helps to improve the lives of millions of people around the world, or develop an idea which goes viral. And I speak from experience, developing text messaging platform FrontlineSMS a few years ago with little funding or resources, which now is driving thousands of social change projects in more than 170 countries.
Studies Show: People Want Democracy to Deliver the Goods
Does the average person consider governance when they think about the things that affect their everyday lives? In a new Overseas Development Institute (ODI) paper that assesses views on governance based on survey data from around the world, we find that they do. But governance has many aspects, and there are some that are more important to people than others. In general, people seem to be concerned first and foremost about state performance and the ability of governments to deliver on key needs and expectations in areas including economic management, growth stimulation, job creation, health, education, or a more equitable distribution of goods and services. Corruption is a central part of this story, since it has such a big impact on people's satisfaction with their governments and their perceptions of its performance overall.
World Press Freedom Index 2014
Reporters Without Borders
The 2014 World Press Freedom Index spotlights the negative impact of conflicts on freedom of information and its protagonists. The ranking of some countries has also been affected by a tendency to interpret national security needs in an overly broad and abusive manner to the detriment of the right to inform and be informed. This trend constitutes a growing threat worldwide and is even endangering freedom of information in countries regarded as democracies. Finland tops the index for the fourth year running, closely followed by Netherlands and Norway, like last year. At the other end of the index, the last three positions are again held by Turkmenistan, North Korea and Eritrea, three countries where freedom of information is non-existent. READ MORE
Throwing the transparency baby out with the development bathwater
In recent weeks, a number of leading voices within the international development movement – including the billionaire philanthropist Bill Gates as well as development economist Chris Blattman and tech-for-development expert Charles Kenny - have come out arguing that corruption and governance efforts in developing countries should be de-prioritized relative to other challenges in health, education, or infrastructure. Their basic argument is that while yes, corruption is ugly, it’s simply another tax in an economic sense and while annoying and inefficient, can be tolerated while we work to improve service delivery to the poor. The reality is more complicated and the policy implications precisely the opposite: corruption’s “long tail” in fact undermines the very same development objectives that Gates, Blattman, and Kenny are advocating for. READ MORE
In a previous blog we discussed the factors that have pushed issues of corruption to the centre of policy debates about sound economic management. A related question deals with the sources of corruption: where does it come from, what are the factors that have nourished it and turned it into such a powerful impediment to sustainable economic development? Economists seem to agree that an important source of corruption stems from the distributional attributes of the state. For better or for worse, the role of the state in the economy has expanded in a major way over the past century. In 1913 the 13 largest economies in the world, accounting for the bulk of global economic output, had an average expenditure ratio in relation to GDP of around 12%. This ratio had risen to 43% by 1990, with many countries’ ratios well in excess of 50%. This rise was associated with the proliferation of benefits under state control and also in the various ways in which the state imposes costs on society. While a larger state need not necessarily be associated with higher levels of corruption—the Nordic countries illustrate this—it is the case that the larger the number of interactions between officials and private citizens, the larger the number of opportunities in which the latter may wish to illegally pay for benefits to which they are not entitled, or avoid responsibilities or costs for which they bear an obligation.
For those of us who have had an interest in corruption for much of our careers, there is little doubt that sometime in the late 1980s and early 1990s there was a shift in thinking within the development community about the role of corruption in the development process. The shift was tentative at first; continued reluctance to touch upon a subject that was seen to have a large political dimension coexisted for a while with increasing references to the importance of “good governance” in encouraging successful development. What were the factors that contributed to this shift? One that quickly comes to mind is linked to the falling of the Berlin Wall and the associated collapse of central planning as a supposedly viable alternative to the free market. It was obvious that it was not inappropriate monetary policies that led to the collapse of central planning but rather widespread institutional failings, including a lethal mix of authoritarianism (i.e., lack of accountability) and corruption.
These are some of the views and reports relevant to our readers that caught our attention this week.
Big data: 4 predictions for 2014
"One could look back at 2013 and consider it the breakthrough year for big data, not in terms of innovation but rather in awareness. The increasing interest in big data meant it received more mainstream attention than ever before. Indeed, the likes of Google, IBM, Facebook and Twitter all acquired companies in the big data space. Documents leaked by Edward Snowden also revealed that intelligence agencies have been collecting big data in the form of metadata and, amongst other things, information from social media profiles for a decade." READ MORE
The rise of civil society groups in Africa
"Under the glaring sun of a recent Monday, an unusual group of protesters marched on the streets of Kampala, Uganda’s capital, all dressed in black “to mourn the loss of Uganda’s public money through corruption,” as some of them pointedly explained to reporters. “Return our money and resign,” read one of the slogans they brandished. Since November 2012, on the first Monday of each month, the Black Monday Movement—a coalition of local NGOs and civil society groups—has taken to the streets to highlight the effects of corruption in Uganda and to press public officials to act." READ MORE
A government's ability to prevent, detect, and deal with corruption depends on how well key institutions like the government, police and media can coordinate and work together. Transparency International assess these institutions and maps out plans for reform in the following video.
Source: Transparency International
In the next few weeks, we will be running our Top Ten Blog Posts by readership in 2013
Originally published on May 22, 2013
I attended a panel + booklaunch on the theme of ‘Citizens Against Corruption’ at the ODI last week. After all the recent agonizing and self-doubt of the results debate (‘really, do we know anything about the impact of our work? How can we be sure?’), it was refreshing to be carried away on a wave of conviction and passion. The author of the book, Pierre Landell-Mills is in no doubt – citizen action can have a massive impact in countering corruption and improving the lives of poor people, almost irrespective of the political context.
The book captures the experience of the Partnership for Transparency Fund, set up by Pierre in 2000. It summarizes experiences from 200 case studies in 53 countries. This has included everything from using boy scouts to stop the ‘disappearance’ of textbooks in the Philippines to introducing a new code of ethics for Mongolia’s judiciary. The PTF’s model of change is really interesting. In terms of the project itself:
- Entirely demand led: it waits for civil society organizations (CSOs) to come up with proposals, and funds about one in five
- $25k + an expert: the typical project consists of a small grant, and a volunteer expert, usually a retiree from aid agencies or governments, North and South. According to Pierre ‘the clue to PTF’s success has been marrying high quality expertise with the energy and guts of young activists’. (I’ve now added ‘Grey Wonks’ to my ‘Grey Panthers’ rant on why the aid world is so bad at making the most of older people).
- The PTF is tapping into a zeitgeist of shifting global norms on corruption, epitomised by the UN Convention Against Corruption (2003). The idea that ‘they work for us’ seems to be gaining ground.
- The PTF prefers cooperation to conflict – better to work with champions within the state (and there nearly always are some, if you can find them), than just to lob rocks from the sidelines (although some rock-lobbing may also be required).
- It also prefers action and avoids funding ‘awareness-raising’, ‘capacity building’ and other ‘conference-building measures.’
So what works? On the basis of the case studies (chapters on India, Mongolia, Uganda and the Philippines), and his vast experience of governance and corruption work, Pierre sets out a ‘stylized programme’ for the kinds of CSO-led initiatives that deliver the goods:
I was surprised not to see more coverage of last week’s hard-hitting report from the Global Financial Integrity watchdog. Illicit Financial Flows from Developing Countries: 2002-2011 has a whole bunch of killer facts about the escalating haemorrhage of wealth from poor countries. Here are some highlights. My additions in square brackets/italics:
“We estimate that illicit financial outflows from the developing world totalled a staggering US$946.7 billion in 2011, with cumulative illicit financial outflows over the decade between 2002 and 2011 of US$5.9 trillion. [By way of comparison, total global aid in 2011 was $134bn (not mn as first printed -thanks to all of you who pointed this out) – 14% of illicit flows - and has fallen since, even as illicit flows keep booming. Want that as a soundbite? ‘For every dollar of aid, the South loses $7 in illicit outflows; developing countries are losing $2.6 bn a day/$108m per hour/$2m per minute/$30,000 per second’.]
This gives further evidence to the notion that illicit financial flows are the most devastating economic issue impacting the global South. Large as these numbers are, perhaps the most distressing take-away from the study is just how fast illicit financial flows are growing. Adjusted for inflation, illicit financial flows out of developing countries increased by an average of more than 10 percent per year over the decade. Left unabated, one can only expect these numbers to continue an upward trend.