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The Moral Dimensions of Corruption

Augusto Lopez-Claros's picture

2010 International Corruption Hunters Alliance Conference In our earlier blogs on corruption we have looked at the causes and consequences of corruption within the process of economic development. In our last blog, Six Strategies to Fight Corruption, we addressed the question of what can be done about it, and discussed the role of economic policies in developing the right sorts of incentives and institutions to reduce its incidence. This blog will provide some thoughts on the moral dimensions of corruption.
 

Why More Corruption Created Fewer Problems for Companies?

Sebastian Eckardt's picture

A Ukrainian paradox
 
Kremenchug Hydroelectric Power PlantVZ-UK002 When Ukrainians took the streets in the winter of 2013/14, protests – sparked by the then Government’s decision to suspend the signing of the association agreement with the EU – reflected widespread discontent over deep-seated corruption. From its independence over two decades ago, Ukraine has struggled with corruption and state capture.  So-called oligarchs dominate large sectors of the Ukrainian economy, extracting rents and controlling the state through direct representation in the Parliament. This allowed oligarchs to tap into rich sources of corruption, including energy subsidies, discretionary public procurement, privatization of state assets and wide spread tax fraud and evasion. These governance failures created an economy largely built around redistribution of rents. Arguably, this accounts for much Ukraine’s dismal economic performance despite an abundance of natural resources, qualified human capital and a strategic location in the center of Europe.

ست استراتيجيات لمكافحة الفساد

Augusto Lopez-Claros's picture
Also available in: English

بعد أن تعرفنا على بعض الطرق التي يضر بها الفساد النسيج الاجتماعي والمؤسسي لبلد (e)ما، ننتقل إلى خيارات الإصلاح المتاحة أمام الحكومات للحد من الفساد والتخفيف من آثاره. وتوصي روز أكرمان (1998) باستراتيجية ذات شقين تهدف إلى زيادة فوائد الأمانة ورفع تكاليف الفساد، وهي عبارة عن مزيج معقول من الثواب والعقاب باعتبارهما القوة الدافعة للإصلاح. هذا موضوع كبير. ونناقش فيما يلي ستة نُهج تُكمل بعضها بعضاً.

Six Strategies to Fight Corruption

Augusto Lopez-Claros's picture
Also available in: العربية

Having looked at some of the ways in which corruption damages the social and institutional fabric of a country, we now turn to reform options open to governments to reduce corruption and mitigate its effects. Rose-Ackerman (1998) recommends a two-pronged strategy aimed at increasing the benefits of being honest and the costs of being corrupt, a sensible combination of reward and punishment as the driving force of reforms. This is a vast subject. We discuss below six complementary approaches.

Rana Plaza One Year On

Ellen Goldstein's picture

Lessons on Governance from Bangladesh’s Garment Industry


One year ago today, in the outskirts of Bangladesh’s capital city, an eight-story garment factory collapsed of its own weight, killing 1,130 young workers and injuring thousands more.  The ghastly photos of bodies trapped in the Rana Plaza wreckage provoked outrage in the wealthy world, targeted largely at global retailers who purchased garments there.  North American and European consumers called for measures to ensure safe conditions and humane treatment for Bangladeshi garment workers, mostly young women from poor families in remote rural areas.  Many called for a boycott of the big-box retailers and of the Bangladeshi products they sell.

I had just moved from Bangladesh to Europe at the time, and my advice to friends who asked was: “Go ahead and buy those skinny jeans or that tank top if you want.  It’s the right thing to do for Bangladesh and its young workers.”

Nine Reasons why Corruption is a Destroyer of Human Prosperity

Augusto Lopez-Claros's picture

Anti-Corruption billboard 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.

All in the Family

Bob Rijkers's picture

Crony capitalism is the key development challenge facing Tunisia today

A plaque for Place de 14 janvier, 2011, 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.

What are the Sources of Corruption?

Augusto Lopez-Claros's picture
Also available in: Français | Español

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.

Why is Corruption Today Less of a Taboo than a Quarter Century Ago?

Augusto Lopez-Claros's picture
Also available in: Français | Español

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.