Corruption, one of the primary impediments to economic
growth, yet among the least systematically tackled, undermines the fragile
political and economic progress being made by emerging democracies, including
Mexico, Indonesia, and Nigeria. Recent impressive growth
notwithstanding, corruption also threatens to hold back India’s and Brazil’s
drive to join the ranks of the world’s developed countries, and has brought
Venezuela and Ukraine to the brink of political collapse. Even China,
this century’s economic star, is being handicapped in its long-term quest to
overtake the U.S. economically by corruption, so much so that China’s new
supreme leader, President Xi Jinpang, has made stamping it out one of the main
priorities of his time in office. According to Transparency
International’s 2013 Corruption Perceptions Index, nearly two-thirds of the
countries surveyed (including all of the aforementioned), were categorized as
more corrupt than not. The index scores countries from 0 (highly
corrupt) to 100 (very clean). Over half of the survey’s respondents, 55
percent, said that corruption has worsened over the past year. Nearly
all of the survey’s most corrupt countries ranked among the world’s poorest.
Bribes and backroom deals, the most common forms of corruption,
undermine economic development and destroy trust in a country’s political,
judicial, security, and business leaders, the report concludes.
CORRUPTION TRIGGERS UNREST: Recent widespread protests in Ukraine and
Venezuela have been largely sparked by widespread corruption. Venezuela
ranks as the world’s 9th most corrupt country (20) and Ukraine is the 14th most
corrupt (25). Corrupt policemen and government officials in Venezuela
regularly abuse their power to enrich themselves through bribery and extortion.
Ukraine’s economy has stagnated since it broke free from the Soviet
Union in the early 1990s. The country’s per capita output, which was
roughly equal to Poland’s two decades ago, is now one-third as large.
Ukraine’s recently deposed president, Victor Yanukovich, and his predecessor,
Yulia Tymoshenko, both closely tied to the country’s billionaire oligarchs,
enriched themselves while in office to the tune of hundreds of millions of
dollars.
GREATER ECONOMIC FREEDOM IN ASIA FAILS TO STEM CORRUPTION: Despite robust economic growth over the past decade, many countries in
Asia still rank poorly on international corruption indexes. Between
2001-2010, $2.74 trillion in illegal funds left China (20) through criminal
financial schemes, corruption, tax invasion, or other illegal activities,
according to a study by the U.S-based Center for International Policy.
India (36) and Thailand (35) had nearly $123 billion and $64 billion
spirited away, respectively. In China, bribery, uncompensated taking of
private property by unscrupulous local Communist Party officials looking to
cash in on the country’s real estate boom, poor construction and shoddy goods
are the main sources of widespread public discontent. India has not
nearly met its full economic potential in large part to widespread corruption
permeating every level of government from the national parliament to local
police forces. The ruling Congress Party (projected to lose in upcoming
parliamentary elections in part because of corruption) regularly demands
massive kickbacks from businesses for defense and infrastructure projects.
According to the country’s leading business publication, Business
Weekly, public corruption cost the Indian economy at least $50 billion
annually.
MIDDLE EAST AND AFRICA SWIMMING IN CORRUPTION: The
regions most lagging in economic development, the Middle East, Africa and Latin
America, contain nearly all of the world’s most corrupt countries. Transparency
International’s findings indicate that the Arab Spring uprisings, which were
largely caused by anger with unethical government officials, have not brought
about a decline in corruption in Egypt (32), Libya (15), Tunisia (41) or Yemen
(18). Sub-Saharan African is the region most affected by corruption. All
of the region’s countries rank among the world’s most corrupt and nearly
three-quarters of the region’s people say they paid a bribe to a public body in
the last year, according to Transparency International. In addition, very few
expressed confidence that the police, judiciary, or politicians look out after
the general population’s interest rather than their own. How bad is it
in Sub-Saharan Africa? The world’s most corrupt country, Somalia (8),
has a barely functioning government, while the second most, Sudan (11), is
fomenting a civil war in the third most, South Sudan (14).
Latin America makes economic progress but fails to stem the
tide of corruption: In the Americas, Brazil’s star turn on the global
stage – it will be hosting the World Cup this summer and the Olympics in
2016—is being overshadowed in part by corruption scandals involving officials
overseeing tens of billions of dollars in infrastructure and stadium
construction. Last year’s large-scale protests (which continue albeit
less widespread) across Brazil were sparked by the public’s disgust at
politicians and businessman lining their pockets at the expense of the
country’s middle class and poor. Drug cartel-centered corruption has
migrated north from Colombia and south from Mexico to Guatemala (29), El
Salvador (38), and Honduras (26), fueling political instability and widespread
violence. Numerous politicians and law enforcement officials have
been accused of protecting drug cartels, bribery, and money laundering, and
more than 100,000 people, including 66,000 in Mexico, have died the last six years
in drug-related violence, according to the Los Angeles Times.
Drug-trafficking and gang violence have shaved at least 2 percent economic
growth in all five countries with Guatemala, Honduras and El Salvador
particularly hard hit given their relatively low per capita incomes, according
the Organization of American States. Latin America’s largest economies
Brazil (42) and Mexico (34) ranked in the middle of Transparency
International’s 2013 index, yet both were judged as being more corrupt than
not. Despite some progress and willingness to reform (the Mexican
government recently announced a plan to partially privatize the national oil
company, Pemex, for example) both economies are still largely based on cronyism
and patronage preventing them from reaching their full potential given their
natural resources.
PEOPLE FED UP WITH CORRUPTION TAKES TO THE STREET: Protests around the world (including the Arab Spring and Occupy Wall
Street) fueled by corruption and economic instability, demonstrate that citizens,
whether they are from relatively rich countries like the U.S. or poor like
Egypt and Ukraine, are no longer willing to stand by as political and economic
decisions are unduly influenced by special interests, valuable resources are
exploited by politically connected individuals for personal gain, and public
services are weakened because funds intended for them are stolen. Why
Nations Fail: The Origins of Power, Prosperity, and Poverty by economists Daron
Acemoglu and James Robinson, contends that the wealth of a country is most
closely correlated with the degree the average person shares in overall growth
of its economy. According to the book’s thesis, when a nation’s
institutions, public officials, and business leaders through corruption prevent
individuals from benefiting from their own work, no amount of foreign aid,
disease eradication or infrastructure development can compensate. Put
another way, corruption, abuse of public resources, bribery, and cronyism
prevent countries and their people from reaching their full economic potential.
Mark Goebel is a contributing writer at Highbrow Magazine.
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