The relationship between Corruption and Development is one that has fascinated me for quite a while, I have written about Corruption in the past here, my argument then was that the perception that somehow Corruption was an African predicament was fatuous .
Corruption is a human condition and can be found in most places when one person is buying or selling to another.
Some of the biggest corruption scandals have happened in the West, the Abramoff lobbying Scandal in the US, The BAE/Saudi bribery scandal and many more.
“ One mans bribery is another mans Consultancy fee”
Economists far cleverer than myself have difficulty agreeing on whether Corruption has a positive or negative impact on countries, there are those like Leff(1964), Huntington(1968), Frederich(1972) and Nye(1967) who argue that corruption has the effect of greasing the wheels of Business and Commerce thereby facilitating Economic growth and Investment, this is sometimes referred to as “The efficiency enhancing approach”
Other Economists suggest Corruption has an “efficiency reducing impact” on the Economy, McMullan(1961),Shliefer & Vishny(1993), Tanzi & Davoodi(1997) argue that Corruption hinders economic growth and distorts the allocation of resources, thereby having a negative impact on the Economy.
The Economist recently produced a interesting a graph plotting Transparency Internationals’ Corruption index against the UN’s Human Development Index..
Here is what the Economist had to say :
Comparing the corruption index with the UN’s Human Development Index (a measure combining health, wealth and education), demonstrates an interesting connection. When the corruption index is between approximately 2.0 and 4.0 there appears to be little relationship with the human development index, but as it rises beyond 4.0 a stronger connection can be seen. Outliers include small but well-run poorer countries such as Bhutan and Cape Verde, while Greece and Italy stand out among the richer countries
What exactly does the Corruption perception index cover? Transparency International says :
The Corruption Perceptions Index ranks countries and territories according to their perceived levels of public sector corruption. It is an aggregate indicator that combines different sources of information about corruption, making it possible to compare countries.
The 2011 index draws on assessments and opinion surveys carried out by independent and reputable institutions. These surveys and assessments include questions related to the bribery of public officials, kickbacks in public procurement, embezzlement of public funds, and the effectiveness of public sector anti-corruption efforts. Perceptions are used because corruption is to a great extent a hidden activity that is difficult to measure. Over time, perceptions have proved to be a reliable estimate of corruption.
Would this index change if Transparency International included the impact of lobbying in decision making by Governments. In the US and much of the West Government Policy is driven by lobbyists. Companies spend billions of dollars hiring lobbying firms to influence policy in their favor.
In the US, Congressmen, Senators and even the President rely on contributions from Private companies in order to get elected, do these contributions have any impact on the decisions these officials make once in Government?
An anecdote :
A British company wanted the Energy Minister of an African country to authorize the State run Electricity company to collaborate with the company to introduce a broadband service that would run along the power-lines owned by the State, there was no cost to the state whatsoever, however the Minister insisted on $50,000 before he would act. The company rightly refused and took their business to another country.
A British company working in the developing world contributed almost £40,000 to the office/campaign of the UK minister in charge of International Development, when this company found themselves in trouble in one of the African Countries they operated in they contacted the minister. The company had been banned because its agents had been caught breaking the laws of the host country, however after the UK Minister had a quiet word with the Vice President of the host country, the ban was immediately rescinded.
Both of these anecdotes are true, Is the second scenario any less corrupt than the first one?








