Corruption

This is an interesting article on corruption in mint.

“Kakha Bendukidze, whose reforms took the nation of Georgia from the 124th place in Transparency International’s corruption perceptions index in 2003 to 50th place today, recalled in an interview with Ukrainian journalist Vladimir Fedorin that he once attended a RAND Corporation-organized US-Russian business forum, attended by Donald Rumsfeld and Paul O’Neil, both of whom had leading roles in George W. Bush’s administration.

“Once a Russian participant was complaining about corruption. So Rumsfeld said to that: ‘I think there’s a simple way to combat corruption—you need to pass a law to ban corruption.’ All the Russian participants were rolling around laughing, and the Americans were nodding their heads earnestly: ‘Yes, yes.’”

It may not have happened quite like that, but Bendukidze, known for his sharp wit, seized on an important issue: Western experts stress the institutional, legal and enforcement side, as if unaware that laws can be ignored, institutions subverted and enforcers can become the problem rather than the solution.

Bendukidze’s own solution was not of the kind recommended at international conferences or in IMF papers. “Liberalization and deregulation helped destroy corruption, and the destruction of corruption, in turn, helped liberalization and deregulation,” was how he described the process.

Bendukidze’s theory was that to remove corruption, a government had to get rid of departments that it knew it could do without and reduce contact between citizens and government to a minimum. Thus, he closed down Georgia’s antitrust committee, which, he said, was doing little except taking bribes, and disbanded the notoriously venal traffic police. No one missed either, and monopolization or traffic chaos did not ensue. Georgian culture changed quickly, and the country didn’t slip in the Transparency rankings even after Bendukidze and Saakashvili were driven out of office. Georgia is now the cleanest country in the former Soviet bloc, but no other nation—including post-revolutionary Ukraine—has had the courage to adopt this draconian approach.” …..

“Eradicating corruption in countries where it is the way of life can’t be achieved by following a rule book. Bendukidze’s method probably isn’t the only possible one, but no useful recipe can be based solely on recommendations from law-abiding, orderly Western societies: Post-Communist states, and probably many in Africa and Asia, have deep traditions of subverting and mocking the systems and institutions of power.

According to the IMF, corruption costs the world $1.5 trillion to $2 trillion a year, or 2% of global economic output, mainly by undermining incentives for taxpayers to share their incomes with governments, increasing costs and undermining the quality of public spending, and stifling private investment and productivity. The losses mostly occur in the countries that can least afford them. The West cannot do much to help, either in terms of enforcement or by offering advice. It’s up to each corrupt nation to rip up its bureaucracy and chase away its architects.”

I would like to see interesting anecdotes of mechanisms which successfully reduced corruption in India.

 

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Author: Bobbur Abhilash

I am a fourth year Doctoral student in the Finance and Control Department at IIM Calcutta.

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