Economic Research Forum (ERF)

Anti-corruption strategies: successes and failures

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Countries in the Middle East and North Africa don’t typically score well in term of corruption. This column looks at anti-corruption strategies around the world to explore what might be done. Overall evidence points to an absence of monitoring as well as potential capture by governments and donors as the main reasons for the lack of success of such strategies.

In a nutshell

The fight against corruption is not easy, but it is not a lost battle.

Scandinavia and North America were among the most corrupt places in the world two centuries ago: they are now cited among the ‘cleanest’. More recently, anti-corruption strategies in Singapore and Hong Kong have achieved great success.

The historical record of these countries confirms the crucial role played by collective action, information and education.

Corruption is old, widespread and multifaceted. It poisons the lives of both developing and developed countries’ citizens. References to corruption can be traced back to the Code of Hammurabi, King of Babylon, in the twenty-second century BCE.

Corruption is prevalent in such diverse fields as health, education, justice, sports, unions and media. It can involve both transfers of relatively small amounts to low ranked officials (petty corruption) and large payments to high ranked civil servants or politicians (grand corruption). And it can involve nepotism, favouritism and theft of state assets.

Countries in the Middle East and North Africa don’t score well in term of corruption. Out of 176 countries listed by Transparency International in 2016, the United Arab Emirates and Qatar are the best ranked among countries in the region, 24th and 31st respectively. The worst are Libya (170th), Yemen (170th) and Syria (173rd).

The overwhelming majority of empirical evidence indicates that corruption imposes important costs on society, although some economists and political scientists argue that it can ‘grease the wheels’ of business in some circumstances.

The amount and costs of corruption are largely unknown since the phenomenon is, by definition, secret. Available estimates suggest that the total amount of corruption is more than US$1 trillion per year and that its effects include reductions of investment and GDP by almost 5% each. Corruption also has non-economic costs, which affect the quality of infrastructure, the level of trust in the state and other citizens, and the degree of political participation and regime legitimacy.

Corruption is not just a national phenomenon. Very often, politicians, rulers or highly ranked civil servants put the money from their illegal activities into specific foreign countries. This makes corruption increasingly associated with the financing of international terrorism and narcotics traffic.

Hence, the remedy to corruption needs to be transnational. The United States was the first to adopt such transnational treatment in 1977. Its Foreign Corrupt Practices Act punishes corruption acts made outside the United States by any firm linked to the US economy: the outcomes of its enforcement are highly encouraging Since then, many similar initiatives have been developed, for example, by the United Nations, the OECD and the World Trade Organisation.

Anti-corruption strategies adopted around the world can be split into two complementary categories. One focuses on institutional reforms; the other emphasises the role of civil society.

Starting from the top of institutions, the fact that autocratic regimes are, in general, more corrupt than democracies motivates the move toward democracy as a prerequisite for the fight against corruption. But corruption also exists in democracies, for example, because of the need to fund electoral campaigns. Hence, complementary mechanisms, such as punishment, reward or challenge to officials’ decision-making power, have been suggested as ways to keep officials away from corruption.

Punishment poses the question of whether the briber, the bribed or both should be punished. This question is nurturing a passionate debate in India, the world’s biggest democracy and one of its most corrupt countries.

Punishment also induces costs for collecting evidence, confronting the defendant and enforcing the judgement. Many developing countries lack the financial and human resources to accomplish such complex tasks.

Furthermore, justice itself may be corrupt or under influence. As an alternative, many countries draw on the help of donors to establish independent anti-corruption agencies. But except in Singapore and Hong Kong, these agencies have been a failure: their independence was not effective, the resources lacking and the monitoring poor.

Reward, generally, consists of increasing salaries. But in all the countries that have adopted this solution, corruption didn’t decrease because the problem of monitoring remained unsettled. Very often, officials consider the increase in wages as complementary revenue rather than a substitute for corruption.

Breaking up the ‘monopoly’ power of civil servants can be achieved by making tasks do-able by different people, rotating employees in charge of tasks or transferring some tasks to the private sector. In many cases, these solutions appear costly because agents had to adapt to new routines, cases and rules. Moreover, when private firms engaged in service delivery are left to themselves, they can turn to promoting corruption instead of curbing it.

Overall, the evidence points to an absence of monitoring and potential capture by governments and donors as the main reasons for such lack of success. This suggests that whatever the anti-corruption strategy is implemented, monitoring and control are crucial – which, in turn, puts civil society on the frontline. Because even an ‘honest’ ruler cannot control the actions of each civil servant, collective monitoring by civil society appears to be more effective.

Moreover, corruption is increasingly systemic, which explains the failure of many anti-corruption projects. It is almost impossible for a single official to remain honest without running the risk of facing the hostility of colleagues or the hierarchy, being ostracised or even losing their life.

For collective monitoring and control to be successful, monitors should be able to access, process and use information efficiently. Evidence shows that the strength of civil society has a strong anti-corruption impact only in countries with high press freedom. At the same time, the strength of civil society can be a strong complement to media through information and communications technology-mediated social fora, and by reinforcing the pressure for information disclosure and accountability.

But the effectiveness of this process depends on the education level of citizens. Education is commonly associated with the acquisition of knowledge, which is a necessary step towards citizens’ efficient exploitation of the information provided by the media. In addition, education equips citizens with tools for effective participation in democracy. Education also fosters citizens’ adoption of civic values.

In sum, although the fight against corruption is not easy, it is not a lost battle a priori. Some places, such as Scandinavia and North America, were among the most corrupt in the world two centuries ago: they are now cited among the ‘cleanest’. More recently, anti-corruption strategies in Singapore and Hong Kong are examples of great success. The historical record of these countries confirms the crucial role played by collective action, information and education.

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