Corruption Matters

The conclusion of Andres Oppenheimer’s column from the Miami Herald sparked my curiosity about the World Bank report it’s based upon:

With democratic institutions, a free press and a professional – not politicized – civil service, corruption can be reduced anywhere.

Of course, certain countries don’t care for that conclusion:

Granted, the World Bank didn’t publicly present the figures as a world ranking of corruption, perhaps fearing that member countries would raise hell if ranked at the bottom of the list. Rather, it listed all countries alphabetically, with the figures on how they measured in their anti-corruption controls on a scale of 1 to 100.

Even that has created an internal political upheaval at the Washington financial institution: Argentina, China and Russia officially complained to the World Bank’s top authorities about the report, World Bank officials confirmed to me last week after The Financial Times and Reuters reported the story.

Transparency International puts corruption in the proper context. Its definition:

Corruption is the abuse of entrusted power for private gain. It hurts everyone whose life, livelihood or happiness depends on the integrity of people in a position of authority.

The dire consequences:

Corruption has dire global consequences, trapping millions in poverty and misery and breeding social, economic and political unrest.

Corruption is both a cause of poverty, and a barrier to overcoming it. It is one of the most serious obstacles to reducing poverty.

Corruption denies poor people the basic means of survival, forcing them to spend more of their income on bribes. Human rights are denied where corruption is rife, because a fair trial comes with a hefty price tag where courts are corrupted.

Corruption undermines democracy and the rule of law.

Corruption distorts national and international trade.

Corruption jeopardises sound governance and ethics in the private sector.

Corruption threatens domestic and international security and the sustainability of natural resources.

Those with less power are particularly disadvantaged in corrupt systems, which typically reinforce gender discrimination.

Corruption compounds political exclusion: if votes can be bought, there is little incentive to change the system that sustains poverty.

The conclusion – Corruption hurts everyone.

So, I looked more closely at the World Bank study, all 94-pages with numerous charts of data.

The data and methodology appear as competent as possible.

This paper reports on the latest update of the Worldwide Governance Indicators (WGI) research project covering 212 countries and territories and measuring six dimensions of governance between 1996 and 2006: voice and accountability, political stability and absence of violence, government effectiveness, regulatory quality, rule of law, and control of corruption. This latest set of aggregate indicators are based on hundreds of specific and disaggregated individual variables measuring various dimensions of governance taken from 33 data sources provided by 30 different organizations….

Table 6 mindnumbingly presents summary data.

The BBC, however, conveniently summarizes:

A report measuring the quality of government in 212 countries from 1996 to 2006 found Africa had shown the greatest improvement.

The report judged whether countries had free media, political stability, the rule of law and control of corruption.

Countries in decline included Zimbabwe and Venezuela, but there were as many gainers as losers….

No surprise there. Also, no surprise here: where freedoms have expanded, corruption declined.

The report noted the fast-paced progress of emerging economies, including Estonia, Latvia, the Czech Republic and Costa Rica, which score higher on key dimensions of governance than their industrialised counterparts, including Greece and Italy.

The BBC quotes:

Shlomo Yitzhaki, director of Israel’s Central Bureau of Statistics and Professor of Economics at Hebrew University, said the World Bank’s governance indicators were a “crucial tool” for policy analysts and decision-makers benchmarking their countries.

“It definitely sets a standard for transparency in data,” he added.

Good governance has increasingly become a key factor in granting aid to developing countries, and was a policy closely associated with World Bank head Paul Wolfowitz, who was forced to resign last month.

BTW, Freedom House is a key organization to check in with for tracking the course of freedom in the world.

Bruce Kesler

(cross-posted at Democracy-Project.com)

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