1.1. What is the purpose of this writing?
Well over half
of the world’s inhabitants live in countries where corruption is relatively
common, according to standard survey data. In other words, most people on earth live
in places where
they must contend with the fundamental dilemma of corruption, whether to pay a
bribe to receive a government benefit or service they need and to which they may
well be entitled, or to take the moral high ground and go without.
Ordinary citizens are
often well aware that they are the victims of corruption, but feel powerless to
do anything about it. The purpose in this writing is to provide an understanding
of the dilemma corruption presents to people trapped in it and to others who
are likely appalled by it. The aim is not only to summarize my own insights but
also to provide the reader with an overview of existing knowledge on political
corruption, knowledge that’s emerged from the work of a great many scholars.
Thus, the aim to help readers (and myself) better understand where, why, and
how corruption occurs. In addition to telling you what all about corruption and
provide a framework for thinking about how to reduce it.
On balance, this
writing also takes the view that corruption carries negative social
consequences: it harms economic efficiency, increases social inequities, and
undermines the functioning of democracy. But corruption isn’t immediately and
directly harmful to everyone-and that’s what makes it such an intractable
problem. Even if corruption carries negative consequences for society as a
whole, individuals become involved in corrupt transactions precisely because
they benefit from them. The corrupt politician or public bureaucrat benefits by
misusing his public office. The benefit usually includes-but is not limited
to-financial gain. Ordinary citizens living in corrupt environments are trapped
by corruption when they pay bribes, knowing full well they are wrong to do so,
because the alternatives-not being able to see the doctor, get a driver’s
license, or receive much-needed government permits-are worse. In the short run,
individuals benefit from corrupt activities even when in principle they dislike
them, making corruption immensely difficult to remedy.
also will be discussing some specific ideas about how to fight corruption. But
to get there we first need to spend some time understanding the nature of the
problem: Where is corruption most common? Who is involved? What kinds of
activities are most susceptible? We also need to better appreciate the
processes that produce it: how does partisan electoral competition promote (or
reduce) corruption? Why don’t democratic elections reduce or eliminate it?
1.2. Why does corruption matter?
The simplest way
to think about corruption is to imagine a public official taking a bribe in the
course of doing his job. This might be a single small bribe, perhaps a trivial
amount used to grease a palm. Or it might be a stream of large payments, such
as millions of dollars from a multinational corporation in exchange for a
government contract for example for this writing is to build new TLDM assets.
We could add up every bribe paid from petty amounts all the way up to grand
corruption but we still wouldn’t capture corruption’s total impact. That’s
because, when bribes are commonplace, it leads to many changes in the way a
society is organized. Many types of political and economic distortions occur
that harm the public good and that lead to yet more corruption. Companies that
pay bribes and win contracts drive their honest competitors out of business,
thereby changing the nature of the market. The public officials on the
receiving end write more rules with the express purpose of taking yet more
bribes, thereby complicating the regulatory environment. Government jobs
attract candidates who want to take bribes rather than serve the public,
leading to less scrupulous officials. Political authorities become dependent on
bribes to fund their re-election campaigns. They proliferate government jobs in
order to put in place more civil servants who will pass portions of bribes up
to the politicians who appointed them, leading to bloated government payrolls.
Governments budget for more roads than necessary, in order to extract more
bribes, thereby reshaping public investment. All those roads require more
cement than would otherwise be used, again distorting the market. The public
suffers as a result: there is less money for healthcare and education, and
inequitable access distorted by having to pay bribes for services to which
everyone is legally entitled.
The cost of
corruption is thus not limited to the sum of the bribes paid to public
servants. Corruption is far more corrosive of government and the economy-a
bribe’s impact is magnified through its undermining effect on political and
market institutions. The vast misallocation of public and human resources that
results from widespread corruption impedes the functioning of government and
the economy. (For this reason, organizations across the globe often consider
systemic corruption as an indicator of broader failures of governance.)
effects of corruption are undoubtedly larger-far larger than the direct cost of
bribes and monies embezzled or misappropriated. In this writing, will
abbreviate and examine who pays bribes or embezzles funds and why, with the
goal of understanding why it’s so hard to put a stop to corruption-even when
everyone (or almost everyone) involved wishes otherwise. We now turn to
providing a basic framework for understanding how corruption despite its
damaging effects can be so persistent.
1.3. What is the framework for understanding
corruption as equilibrium in the specific sense that social scientists use the
term. That is, corruption happens as a result of interactions among individuals
in which, given the choices others make, no one person can make herself better
off by choosing any other course of action. This way of thinking about
corruption is especially useful to provide an appreciation for why corruption is
so resistant to remedy.
speaking, there are four types of participants in corrupt activities: elected
public officials (i.e., politicians), government bureaucrats, businesses, and
ordinary citizens. At least superficially, it’s easy to see why each of these
groups chooses to engage in corruption. The incentives of politicians and
bureaucrats the first two types of participants on my list are particularly
obvious. Elected public officials benefit from corruption when they abuse their
positions by extorting bribes from businesses in exchange for government
contracts or favourable legislation. Civil servants, likewise, benefit from
corruption when they augment their salaries with money from bribes that they
take from citizens in exchange for delivering public services or deliberately
neglecting to enforce regulations. Businesses profit from lucrative government
contracts won through bribery or connections, and lower their expenses by
bribing their way around regulations and private individuals.
But if you think
about bribe payers as a group, it’s very far from clear that corruption is good
for them. After all, private individuals are usually paying bribes for
government services to which they’re entitled by law and why should they have
to pay for what’s rightfully theirs?
The same can
often be said of businesses. When they sell their services to governments
contracting to build schools or to provide training, for example the benefits
of paying kickbacks for firms as a group are unclear, because the winning
company’s gains represents other companies’ losses. All companies might well be
better off if they could agree to abstain from paying bribes. The same number
of contracts would still come up for bid, and the winners wouldn’t have to
budget in the extra expense of bribery why, then, don’t businesses and regular
citizens band together and refuse to pay?
2. WHAT IS CORRUPTION?
Corruption consists of the
exploitation of public office for private gain. In many instances, corruption
involves an exchange between a public official and a private citizen, as for
simple example when a contractor bribes a building inspector or a driver pays off
a traffic cop. In other cases, public officials act on their own, as when they
embezzle government funds. But, according to my definition, corruption always
involves a public
official who exploits his or her office to further his or her personal rather than
the public’s interests. There are others who broaden the definition of
corruption to include exploitative behaviours by those employed in the private
sector as well. For example, if you go to the web page of Transparency
International (TI), the best-known anticorruption organization in the worlds,
you’ll find the following definition: “the abuse of entrusted power for private
gain”. This formulation encompasses the self-serving acts of corporate
executives, who are entrusted to run companies in their shareholders’ best
interests. It’s certainly true that business leaders may act in morally
repellent ways, exploiting their power to extract million-dollar paydays
despite poor performance, or wasting shareholder value on corporate jets and
other indulgences. But we’d argue that policing this type of misbehaviour is
better left to corporate governance activists than anticorruption crusaders. My
definition of “corruption” focuses more on the public sector. The private benefits
of corruption can come in many forms-votes or jobs, for example, in addition to
cash. I’ll take a broad view of what constitutes private gain. Most obviously,
politicians accept (or extort) cash bribes, using the money to buy cars, take
vacations, or entertain their escorts. Politicians can (and very often do) also
find jobs or assign contracts to family members. The politician herself may not
be richer for it, but if she cares about her children, her siblings, and her
cousins, she’s benefiting, although in an indirect way. The benefits that call
corrupt extend to the candidate’s partisan interests. Consider, for example, in
the widespread political corruption. It was common for low-level functionaries
in the party to take large-scale bribes for public works contracts, the
percentage of which was passed up the chain of command to party headquarters. The party
used the money to help fund its electoral campaigns. In other cases, a
candidate’s financial resources may be deployed to buy votes directly and many
people did not think that there was anything wrong with the practice. Votes can
be “bought” with sticks as well. A significant fraction of voters like in poor
rural locations who were on the welfare rolls threaten by campaign workers that
their benefits would be cut off if they voted the “wrong way”. All of these
forms of private gain are encompassed by the definition of corruption.
Measuring corruption is hard
because, by definition, its perpetrators wish to conceal it. Thus, most
corruption measures are the result of survey responses, which necessitates the
interpretation with considerable caution. As a result, we’re forced to
measure corruption indirectly. One way to do so is to ask others, such as
political experts or those doing business in the country, how often public
in bribery and embezzlement. The main advantage of this approach is that it is
possible to administer a survey for any country you wish, generating a roughly
comparable index of corruption that can be used to rank countries around the
world. It is likewise possible to use surveys to rank states, regions, or
provinces within a country, or to rank branches of the civil service within a
government. In this writing, ill make frequent use of Transparency
International’s Corruption Perceptions Index (CPI), which is an average of a
number of global corruption surveys conducted by various organizations focused
on government accountability and business climate.
Corruption Perceptions Index is, as the name emphasizes, a perceptions-based
measure rather than one that necessarily reflects anyone’s actual involvement
in corrupt transactions. An alternative way to collect information on
corruption is using experience-based surveys. These may ask corporate employees
to provide estimates of, for example, the fraction of a government contract’s
value that’s paid in kickbacks, or the fraction of revenues that’s spent each
year on bribes. Experiential surveys of ordinary people are also used to
measure the petty shakedowns and extortions of daily life. They ask questions
like “Were you asked for a bribe by a government official in the last year?”
Some surveys include more specific questions, such as, “Were you asked for a
bribe at a public health facility in order to receive treatment? Were you pressured
to vote a certain way with the threat that public services would be withheld if
you failed to comply? Have you paid a bribe to a public official in the last
There are benefits to using
the data generated by each type of respondent and each type of data. A single
expert might be able to assess the extent of corruption in many countries or
using a uniform benchmark to define what constitutes a bribe. Likewise, a
businessperson who works in many locations around the world is implicitly
calibrating responses to a common standard. This allows perceptions-based
surveys to sidestep, to some degree; the concern that what constitutes a bribe
differs across countries. But perceptions-based surveys are also more
vulnerable to misperceptions
resulting from, say, a crackdown that puts bribery in the headlines, even while
actual corruption may be on the decline. And both perceptual and experiential
survey measures can be deliberately distorted up or down depending on the
motives of the respondent. Those opposed to current public policies may wish to
besmirch the government’s reputation by telling surveyors how terribly corrupt
the country is, or they may be so fearful of retribution they say there’s no
corruption at all, even when it’s rampant, despite the promises of anonymity
made by the survey enumerators.
Most often, we can think of
corruption as illegal actions by public officials for private gain, but sometimes legal acts
(e.g., the revolving door in Washington, D.C.) may be deemed corrupt as well.
These cases are often less clear-cut, however.
Bureaucratic and political corruption
differs according to their perpetrators and also in how the proceeds are used. In
particular, politicians often engage in corruption to raise funds for their
Bureaucratic and political
corruption are often intertwined, with politician-appointed bureaucrats
participating in hierarchies of corruption, in which politicians collect bribes
from lower-level officials to fund re-election campaigns.
Corruption differs from
clientelism, in which politicians deliver personal benefits to voters in
exchange for their electoral support.
Electoral fraud is a form of
corruption that attempts to alter electoral outcomes.
3. WHERE IS CORRUPTION
According to widely used
corruption perception surveys, wealthy countries are much less corrupt than
Among poor countries at
comparable levels of income, there is much variation in the extent of perceived
corruption-income relationship is impossible on the basis of cross-country data
alone-very likely corruption causes poverty, poverty causes corruption, and
other factors plausibly contribute to both problems.
We may think of the
corruption-causing-poverty-causing corruption cycle as a “poverty trap” that is
difficult for countries to escape
It is challenging to evaluate
the extent to which corruption is changing over time, for two reasons: (1)
standard cross-country measures cannot be reliably compared across years; and
(2) the greater visibility of corruption could indicate that governments are
more earnest in confronting the problem.
business-government relations in many developed countries may be overly cosy,
there are substantive differences between in?uence peddling and bribery in
their visibility and their consequences. The two also differ in how citizens
need to confront the problems.
4. WHAT ARE THE
CONSEQUENCES OF CORRUPTION?
Until relatively recently,
corruption was seen as harmless or even beneficial to economic development, on
the basis of the “efficient corruption” view, which contended most notably that
corruption allows businesses to circumvent costly and unnecessary regulations.
The efficient corruption hypothesis has largely fallen out of favour in recent years.
One important counterargument
to the efficient corruption view is that; if businesses are able to bribe their
way around unnecessary regulations, this will in turn motivate government officials
to devise red tape for the purpose of extracting bribes.
If businesses can bribe their
way around regulations, they will also be able to avoid rules that reduce profits
but are otherwise socially beneficial, such as worker and consumer protection laws and
regulations designed to prevent overexploitation of natural resources.
In addition to its negative
impact on economic growth overall, corruption tends to increase economic
inequality and to undermine trust in government.
Not all corruption is created
equal. It tends to be less damaging to economic growth when:
a. Bribery is coordinated by a centralized authority;
b. There is less uncertainty about whether bribes will be demanded;
c. There is less uncertainty about whether official will deliver
on their promises in exchange for bribes.
5. WHO IS INVOLVED IN
CORRUPTION, AND WHY?
Conceiving of corruption as an
economic cost-benefit trade-off is a useful starting point for understanding
why public officials embezzle or take bribes. We can think of ethical concerns
as constituting an additional “cost” to an individual’s willingness to behave
engage in corruption to fund their re-election bids. The proceeds may be used
to fund political campaigns and to finance vote-buying efforts.
Corruption among politicians
and bureaucrats is often linked: bureaucrats depend on politicians for their
bribe-taking positions, and must in turn pass on a portion of the proceeds to
politicians to finance their re-election efforts.
Companies pay bribes to avoid
regulations or to beat out competitors with the ultimate objective of
increasing profits. For an individual firm, bribery pays.
For companies as a group,
profits might increase if they could band together and refuse to pay bribes.
But no-corruption agreements are hard to maintain because of each company’s
individual bribe-paying incentives. The situation facing firms is an
illustration of the prisoners’ dilemma.
Survey evidence indicates that
private citizens overwhelmingly believe that corruption is wrong. But to some
extent they are victims of their circumstance-when bribe paying is the norm, it
is very costly not to follow along.
6. WHAT ARE THE CULTURAL
BASES OF CORRUPTION?
Culture governs how
individuals behave in the absence of rules. It has aspects of both values and
Even if individuals are
morally opposed to corruption, pressure to conform to social norms can lead
individuals to behave corruptly in high-corruption environments.
Cultures of corruption can be
reinforced by the self-selection of less honest individuals entering government
in countries where there are opportunities for corruption.
There is no compelling
evidence that any particular religious or ethnic group is especially
susceptible to corruption.
societies are often more corrupt than ethnically homogeneous ones.
7. HOW DO POLITICAL
INSTITUTIONS AFFECT CORRUPTION?
Despite the compelling
argument that electoral accountability should limit government corruption,
there is no evidence that, overall, democratic countries are less corrupt than
There is wide variation in the
extent of corruption in autocratic nations. The unified political authority
enjoyed by autocrats makes them both more effective in cracking down on
corruption when they choose to do so but also more adept at stealing when they
choose to be corrupt.
Political competition for
elective office may, on the one hand, provide incentives for improving the
quality of government. But conversely, it may push candidates to compete based
on vote buying or otherwise trying to win elections through corrupt means.
We observe no clear link
relating institutional differences among democracies (for example, presidential
versus parliamentary systems) to corruption.
It is often assumed that
political or administrative decentralization will reduce corruption by bringing
government decisions into closer contact with the electorate. In practice, this
does not seem to be the case, as local leaders also exploit their positions for
private gain or to ensure re-election.
Neither term limits nor can
campaign finance reform necessarily be expected to generate substantial
reductions in corruption. In fact, both have the potential to backfire: term
limits may reduce political accountability, and campaign finance reform may
push candidates to seek illicit forms of financing.
8. HOW DO COUNTRIES SHIFT
FROM HIGH TO LOW CORRUPTION?
There are two main reasons that voters re-elect
a. Because they lack information on politicians’ illicit behaviour;
b. Because they fail to coordinate their efforts to give up
individual vote-buying or patronage benefits for the collective benefit of
As a result of the need to
coordinate, common knowledge about candidates (and expectations about how
others will vote as a result) is likely important to getting voters to eject
Precisely because corruption
is a stable equilibrium, external forces may be needed to jump-start
Anticorruption reform can come
from government leadership itself, but top-down anticorruption regimes are
extremely rare and their actions implemented arbitrarily
9. WHAT CAN BE DONE TO
Various steps need to be taken to
overcome corruption such as:
a. Increasing government salaries will more plausibly
reduce corruption if accompanied by stricter enforcement or efforts at changing
b. Fighting corruption through stricter monitoring and
enforcement raises the question of how to ensure monitors and enforcers will
not themselves be corrupted. Dedicated and autonomous anticorruption
authorities have shown promise in fighting corruption when accompanied by
popular support, even in high-corruption settings.
c. Technologies such as biometric identification hold promise
for limiting the corruption of government programs and elections. But
technologies can be undermined by those who stand to lose as a result.
d. A free press is useful in exposing corruption and
catalyzing support for reform. But in much of the world, the media is owned
directly or otherwise controlled by the government.
e. Social media holds particular promise as a technology
for creating common knowledge and coordinating anticorruption efforts from the
f. Effective leadership can be very important for driving change
in corruption norms from the top down, serving to coordinate the further
efforts of ordinary citizens.