Different Corruptions Cases
Not all kinds of corruption are equally harmful or equally easy to prevent.
It is important to combine economic analysis with political assessment and ask, "What kinds of corruption hurt the most, and whom? What ways of fighting corruption are most effective, and what are the direct and indirect costs?" In the case of one African country, there is evidence of corruption in several sectors: tax and customs bureaus, the state peanut, the development bank, and perhaps in social services like education.
Several donors have made much of the foregone revenues due to inefficiency and probably bribery in customs and taxes.
But before we equate foregone revenue to social costs, we must ask who gets the money that is now foregone and how they are spending it.
The foregone revenue does not disappear from the face of the earth, nor perhaps even from the country in question.
There are redistribution effects, most likely undesirable ones.
But as old "revisionist" writers on corruption used to say, perhaps the most dynamic economic elements of the society are those who benefit from this kind of corruption, leading to more economic dynamism.
We must also investigate the extent to which various kinds of corruption "block" economic activity, or in contrast the extent to which there a "market price" with low transactions costs and low uncertainty.
Sometimes a corrupt equilibrium has long delays, sometimes what looks like bureaucratic efficiency.
We should focus on the external support and incentives generated by corrupt activities of various kinds, not the amounts of money that changes hands.
As they used to say of government officials in Mexico, "They waste a million to save a thousand.
" Of particular importance is corruption that undercuts financial and banking systems or systems of justice.
The external support can be huge here.
A corruption activity leads to policy distortions.
For political reasons, it is good to begin an anti-corruption campaign where citizens perceive it to be most evident and most annoying, or where the political leadership has given a field particular salience, or one believes that corruption is undercutting economic reform.
It is important to combine economic analysis with political assessment and ask, "What kinds of corruption hurt the most, and whom? What ways of fighting corruption are most effective, and what are the direct and indirect costs?" In the case of one African country, there is evidence of corruption in several sectors: tax and customs bureaus, the state peanut, the development bank, and perhaps in social services like education.
Several donors have made much of the foregone revenues due to inefficiency and probably bribery in customs and taxes.
But before we equate foregone revenue to social costs, we must ask who gets the money that is now foregone and how they are spending it.
The foregone revenue does not disappear from the face of the earth, nor perhaps even from the country in question.
There are redistribution effects, most likely undesirable ones.
But as old "revisionist" writers on corruption used to say, perhaps the most dynamic economic elements of the society are those who benefit from this kind of corruption, leading to more economic dynamism.
We must also investigate the extent to which various kinds of corruption "block" economic activity, or in contrast the extent to which there a "market price" with low transactions costs and low uncertainty.
Sometimes a corrupt equilibrium has long delays, sometimes what looks like bureaucratic efficiency.
We should focus on the external support and incentives generated by corrupt activities of various kinds, not the amounts of money that changes hands.
As they used to say of government officials in Mexico, "They waste a million to save a thousand.
" Of particular importance is corruption that undercuts financial and banking systems or systems of justice.
The external support can be huge here.
A corruption activity leads to policy distortions.
For political reasons, it is good to begin an anti-corruption campaign where citizens perceive it to be most evident and most annoying, or where the political leadership has given a field particular salience, or one believes that corruption is undercutting economic reform.
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