Acknowledgement of the negative effects of corruption on the development of nations has led to an increasing demand amongst the international public for more transparent and democratic governance structures. The goal of these structures is to combat and prevent corruption in both public and private sectors. Governments and stakeholders in the international community recognize that corruption is a fundamental governance issue that can impede economic growth and human development. Subsequently, corruption has come to the fore in international policy circles.
In this essay I address the roots and effects of corruption. I present an overview of approaches to combat corruption at the level of the State, the private sector, and donor agencies. A number of global institutions, such as the World Bank, regional institutions, corporations, and governments have embraced anti-corruption efforts in an attempt to mitigate and prevent it.
Corruption is broadly defined as the abuse of a position of authority in an institution to personally benefit or direct benefits to others. Corrupt behavior takes the forms of bribery, extortion, fraud, or improper use of one’s position to influence other societal actors for personal gain. Samuel P. Huntington states that corruption “is a product of the distinction between public welfare and private interest which comes with modernization.”[1] In short, at the heart of corruption lie the theoretical debates about the balance between the public good and private gain, and about the role of the State in relation to society.
These debates continue as the World Bank, among other institutions, works to modernize State systems in the pursuit of development goals. The overarching objective is to design and implement measures that encourage more democratic forms of governance. These efforts are designed to mitigate, prevent, or eliminate the negative effects of corruption and, therefore, address human development more systematically and transparently.
One of the most negative effects of corruption is its ability to undermine the legitimacy and performance of the State and private sectors economically and politically which can, ultimately, impede human development.
Corruption undermines social, political and economic capital by diminishing the State’s credibility before the public, creating distrust among political actors while encouraging systems of patronage, and distorting economic realities. Consequently, it is necessary to identify and understand cultures of corruption and how they are generated through relations of dependency and exchange, as well as traditions related to State failure or collapse. In turn, it is important to analyze inter-institutional relations and cultures of corruption, especially between the State and private sectors given that this is an important locus of corruption.
Development of a successful strategy to address corruption at the State level should begin with a review of the anti-corruption efforts of other agencies that have similar development goals, such as the United States Agency for International Development, the Inter-American Development Bank, and others.
Primary initiatives taken to curb corruption include capacity building at the State level. Reformation of the legal and judicial systems, strengthening the rule of law, and developing better controls to monitor and evaluate procurement, as well as the delivery of public goods and services should continue to be critical priorities in the effort to combat corruption.
Underpinning each of these strategies is the overall objective of developing more transparent institutional structures. A crucial component of these efforts, of course, is the provision of appropriate training and technical assistance to build the capacities of government officials and individuals in the private sector.
Ultimately, there is a need to change the culture, within a country’s public and private sectors that permit corruption to thrive; this requires an informed citizenry that can hold its leaders accountable. In this regard, supporting the efforts of NGOs that act as ‘watchdogs’ could prove beneficial while providing the global public with access to the information needed to combat corruption. Fundamentally, anti-corruption efforts must include the strengthening of civil society as a priority.
Addressing corruption within any given State will depend on an understanding of that State’s particular context, and an understanding of the areas where corruption poses the biggest challenges and limitations towards a country’s growth and development. An analysis of the degree to which a State is in compliance with legal regional and international frameworks, such as the Inter-American Convention Against Corruption (1996), is a suggested starting point. Beyond the State, a corruption-free private sector is crucial to proper market functioning and, therefore, achieving economic growth and human development.
A reduction in State corruption will naturally reduce private sector corruption as the two are inextricably linked; however, there is still much that can be done in terms of restructuring internal processes to combat corruption within private institutions. In this regard, laws directed towards strengthening corporate governance and accountability are crucial.
Initiatives to assist private sector institutions to develop systems of management controls, such as auditing procedures and/or an office of an inspector general are important. Furthermore, developing institutional systems of incentives, rewards, and sanctions to combat corruption should be made a priority.
There are existing frameworks for combating corruption in the private sector that can be useful in these efforts. For example, identifying the ways in which initiatives such as the Extractive Industries Transparency Initiative (EITI) are achieving established goals and priorities. Drawing on the lessons learned in relation to the EITI would seem to be particularly important given that oil, gas, and mineral exploration are often an important locus of corruption given the extraordinary profits involved.
Furthermore, there is also a risk of corruption within donor institutions themselves, which must be addressed if they are to be effective. Fighting corruption within these institutions requires robust internal policies that discourage corruption and encourage the reporting and investigation of corruption allegations. Regardless of whether the State, development institutions, or the private sector is under discussion, it is important that concrete procedures or systems of due process for addressing corruption, internally and externally, are in place and adapted culturally and administratively to particular institutional contexts.
In conclusion, if the aim of the World Bank is to promote “economic and social progress in developing nations by helping to raise productivity so people may lead better and fuller lives,” then it is imperative that we work collectively towards eliminating the impediments to economic growth and human development (World Bank Mission Statement). Combating corruption is fundamentally about protecting the rights of a global citizenry that is dependent on the State and international institutions working towards economic growth, social and political stability, and human development. In this regard, combating corruption must also be seen as a crucial component in the fight against poverty and chronic underdevelopment.
[1] Huntington, S.P.; Political Order in Changing Societies, New Haven, 1968, p. 61
