Some Countries Really Are More Corrupt Than Others
Yes, corruption exists in the West. But in much of the developing world, it’s a problem on a whole different scale.
Showy Western initiatives to tackle corruption — especially when they focus on the developing world — are always vulnerable to charges of hypocrisy. Sometimes these accusations are well deserved. Shortly before the anti-corruption summit organized in London earlier this month by British Prime Minister David Cameron, it came out that his own family is not wholly innocent of the kinds of shady machinations detailed in the “Panama Papers.” Economist Jeffrey Sachs responded by arguing that the U.K. and U.S. should look closer to home before trying to blame other countries for corruption. Cameron stirred further indignation when he was overheard describing two countries participating in the summit — Nigeria and Afghanistan — as “fantastically corrupt.”
There is, of course, no doubt that corruption is a big problem in the West. But amid all the finger-pointing, it’s important to remember — and to continue to insist — that, while all countries have corruption, they aren’t all equally afflicted by the problem. Even more importantly, they are not corrupt in the same ways.
One can meaningfully talk about corruption as an aberration from normal government — as something that can be controlled through legal mechanisms — only when the state is largely independent from private interests. Such states, where the rule of law predominates, exist in imperfect form in only about fifty countries.
In the rest, corruption is not abnormal. It is a form of governance in its own right — one in which public budgets, banks, and law enforcement are controlled by ruling elites who openly flaunt lavish houses, cars, and incomes worth far more than their declared earnings. In such countries, the privileged do not have to go to some exotic island to hide their money. While visiting Crimea in 2004, I saw an actual castle a local Communist party leader had built for himself in the yard of a gas station he had managed to privatize. Systemically corrupt countries have their very own Virgin Islands within their own borders.
In such countries, it is entirely routine for the government to distribute public goods and resources on the basis of favoritism. Careers are based on connections and not merit, making both markets and politics inefficient. Many of the most talented people leave such places, preventing the creation of a critical mass for reform and reinforcing the fate of the population, subdued and exploited by predatory elites.
It is, in fact, entirely possible to quantify just how successful a particular country has been when it comes to controlling corruption. Some have been much more successful than others — but the difference doesn’t lie in adopting any particular mechanism. If you take the Global Corruption Barometer, whose most recent edition surveyed 72 countries, you see that those that have managed to establish effective control of corruption are not unified by the presence of any particular anticorruption tools or legal regulations. Instead, they have reduced corruption opportunities for the ruling elites and increased the capacity of their society to monitor and sanction corrupt behavior.
We can observe this in the few countries that have progressed from bad to good governance in the last thirty years: Estonia, Georgia, Costa Rica, Chile, Uruguay, South Korea, Taiwan. They have done so through a mix of policies advanced by domestic advocates, not by importing legal silver bullets from abroad. Researchers from ANTICORRP, an EU-funded research project (which I manage), have captured this in the Index of Public Integrity, a statistically tested and objective measure of the capacity to control corruption. This index assembles six components: freedom of the press, digital empowerment of citizens, independence of the judiciary, red tape, fiscal transparency, and trade openness. The results of the index correlate with other indices that measure the perception of corruption, such as those produced by the World Bank and Transparency International. But in contrast to them the IPI is not subjective, but based on six straightforward and measurable policy components.
If the index does not measure legislation or give credit for the existence of dedicated anticorruption institutions, it is because trying to control corruption through specific legal mechanisms only works when rule of law already exists. Where it does not, any new scheme introduced by would-be reformers will simply be captured by the system. It turns out that the rule of law and control of corruption are nearly synonymous. For that reason, defeating corruption must be a political process, rather than a technical one.
Controlling corruption effectively is thus not the result of specific institutions, such as anticorruption agencies or an ombudsman’s offices. Countries that have more restrictive party financing rules or conflict of interest regulations are not less corrupt than others — in fact, many corrupt countries can today boast of tough anti-corruption legislation, but it rarely seems to be doing much good. What enables a country to get corruption under control is the combination captured in the IPI: a reduction in opportunities for rent-seeking (less red tape or barriers to trade, more fiscal transparency) combined with effective public scrutiny and collective action to sanction corrupt behavior. Without active citizens, free journalists, and independent judges, control of corruption is impossible. Any country can check how it ranks on the IPI against other countries and the rest of the world and plan its improvement. The current ranking has Norway at the top, with the best control of corruption, and Venezuela at the bottom. These measurements happen to correlate fairly precisely with the perception of citizens in these countries.
Some contend that the main source of corruption is the unaccountable money from the developed world flowing to the developing one. One Afghan leader at the London summit aptly made this argument, pointing out that the flow of Western money into his country was only making things worse. The academic evidence agrees, having long showed that a stream of cash from foreign aid can act as a resource for corruption, just as domestic natural resources sometimes do.
But the problem is not the foreign money, which is completely benign when invested or donated in a country with low corruption , such as the EU’s cohesion funds in Ireland. Instead, the problem is the unchecked power of governments in many recipient countries. When corrupt elites run the show, they can design the rules to extract as much as possible from all public and private resources, whether local taxes or foreign investment. Cutting off the external funds from aid or trade won’t lead to progress; that will happen only when the government becomes accountable to its own citizens. As I observed in my new book, today there are more than eighty democracies and forty autocracies where public resources are openly raided by whoever comes to power. So yes, it’s a good thing that the London summit adopted measures to target offshore havens. But it’s the havens that operate within national borders where the decisive battle will have to be fought.
Even though tax evaders exist in the developed world, making a distinction between more and less corrupt countries still makes sense, particularly since the strongest constraints against corruption can only be built at the national level. The main obstacle to corruption remains the capacity of a country’s own citizens to hold the government accountable. This is why public opinion immediately forced the resignation of the Icelandic prime minister caught in the Panama scandal, while South African President Jacob Zuma remains in power despite overwhelming evidence of his use of public funds for personal gain.
Cameron and his allies are right to care about transparency in their own countries, but crusaders against corruption should focus their efforts elsewhere. The best approach for international donors is to help local coalitions for integrity in corrupt countries reach the point where corrupt leaders find themselves compelled to leave power — and where those who succeed them find it impossible to repeat their predecessors’ bad behavior. Some countries are more corrupt than others, but the efforts of their own citizens can make them change.
So keep an eye on Brazil, where the capacity to censor elite corrupt behavior appears to be on the rise. That is one of the real battlegrounds.
In the photo, demonstrators chant slogans and hold placards depicting Afghan President Ashraf Ghani outside the London Anti-Corruption Summit on May 12.
Photo credit: JUSTIN TALLIS/AFP/Getty Images