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Old Tuesday, December 07, 2010
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Corruption’s impact


At first the World Bank approached the subject of corruption with some diffidence even when it wished to communicate the message about its ill effects on development.


By Shahid Javed Burki
Tuesday, 07 Dec, 2010


CORRUPTION obstructs development; its prevalence hurts the poor, increases the income gap and produces political and social instability. These are no longer treated as abstract notions. As a result of some serious qualitative and quantitative work done initially at the World Bank and subsequently at several other development institutions there is now a great deal of authority behind these statements.
In the beginning the World Bank approached the subject of corruption with some diffidence even when it wished to communicate the message about its ill effects on development. It used the term ‘poor governance’ as a euphemism for corruption. It was only after the institution came under pressure from the community of donors that it incorporated corruption formally in its research programme and the concern associated with it as a part of its policy framework. Some of its senior staff got involved with NGOs that were committed to reducing corruption across the globe.

By far the most serious work in the area of corruption worldwide has been done by Transparency International (TI), an NGO based in Berlin. Its founder Peter Eigen was once a senior official at the World Bank. He joined hands with a number of former World Bank officials to create TI which within a few years developed a presence around the globe. The organisation has chapters in most large countries, including Pakistan. They work with considerable autonomy from the parent organisation but follow the methodology developed in Berlin.

TI’s annual reports based on the perceptions of those who know and work in the economies being reported on have become influential in throwing light on the incidence of corruption across the globe in developed as well as developing countries. The 2009 report which caused a fair amount of official stir in Pakistan drew on 13 different expert and business surveys “to measure perceived levels of public-sector corruption in a given country. The results in the 2009 index are sobering: the vast majority of countries score below five”.

Pakistan received a low score, sharing the 139th position with several countries including Bangladesh. On a score of zero to 10, with 10 being the least corrupt and zero given to the most corrupt, Pakistan was rated at 2.4. India was ranked at 84 with a score of 3.4. New Zealand with a score of 9.4 was assessed to be the cleanest country; Somalia with a score of 1.1 was seen to be the dirtiest.

Most of the 19 countries with scores below two had social and political problems. Among them were Iraq, Sudan, Haiti, Myanmar and Afghanistan. Pakistan was at the margin of this group of countries. According to TI, the results presented by it “prove that corruption continues to lurk where opacity rules, where institutions still need strengthening and where governments have failed to implement anti-corruption legal frameworks”. A look at the TI index suggests a strong link between democracy and the absence of corrup tion. Of the 30 countries that receive scores of more than six only two (Qatar and the UAE) are non-democratic while two (Singapore and Hong Kong) are partially democratic.

Among the world’s established democracies Portugal with a score of 5.8 is seen as the most corrupt. That democracies would score better is obvious: they have the institutions that help people to air their grievances and provide a way for punishing those who in the public sector don’t walk the straight line. A recent example of this is the way India is handling the case of its former telecom minister who is said to have caused a loss of $40bn to the government. Not only was the minister forced to resign but a criminal investigation is likely to lead to his prosecution.

There were reports in the western press that the authorities in Pakistan were harassing the Pakistani chapter of TI after the latter issued its 2009 annual report. In a recent issue, the New York Times reported that “the head of the Pakistani branch of Transparency International, the global advocacy group that monitors corruption, has alleged intimidation and harassment by government officials for its monitoring of American aid in Pakistan”. The newspaper reported Syed Adil Gilani, chairman of the Pakistani chapter of TI as saying that “recent statements of the Pakistani government amount to harassment”.

From Pakistan’s perspective continuation of corruption at a worrying level is doubly problematic since it affects the poor more than other segments of the population. Development experts have determined that the GNP needs to increase at a rate that is a multiple of the rate of increase in the population to reduce the incidence of poverty.

For a country with a highly skewed distribution of income, the GDP increase should be at least six per cent a year for the incidence of poverty not to increase. With the GDP increase expected to be less than three per cent in 2010-11 the number of people living in absolute poverty may increase by 10 million and reach 70 million.

According to the TI 2009 report, corruption prevents the “poor from participating equally in political decisions, from enjoying equality under the law, from seeing their needs reflected in policies and budgets and from accessing public goods and services. …Decisions on food and energy security, natural resources, technology and investments are often compromised by corruption — with fatal consequences”.

The debate in the country as to how much damage the prevalence of corruption was doing to the quality of governance in general and economic development in particular received a new twist with the release by WikiLeaks of cables exchanged by American diplomats with the State Department in Washington. According to one dispatch from Riyadh, King Abdullah spoke scathingly about the Pakistani president. His comments may have consequences by making the international development community even more reluctant to assist the country.

The writer is chairman of the Lahore-based Institute of Public Policy, a former finance minister of Pakistan and former vice president of the World Bank.
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