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Corruption is both a major cause and a result of poverty around the world. It occurs at all levels of society, from local and national governments, civil society, judiciary functions, large and small businesses, military and other services and so on.
Corruption affects the poorest the most, in rich or poor nations, though all elements of society are affected in some way as corruption undermines political development, democracy, economic development, the environment, people’s health and more.
Around the world, the perception of corruption in public places is very high:
But it isn’t just in governments that corruption is found; it can permeate through society.
The issue of corruption is very much inter-related with other issues. At a global level, the international (Washington Consensus-influenced) economic system that has shaped the current form of globalization in the past decades requires further scrutiny for it has also created conditions whereby corruption can flourish and exacerbate the conditions of people around the world who already have little say about their own destiny. At a national level, people’s effective participation and representation in society can be undermined by corruption, while at local levels, corruption can make day to day lives more painful for all affected.
A difficult thing to measure or compare, however, is the impact of corruption on poverty versus the effects of inequalities that are structured into law, such as unequal trade agreements, structural adjustment policies, so-called free trade agreements and so on. It is easier to see corruption. It is harder to see these other more formal, even legal forms of corruption. It is easy to assume that these are not even issues because they are part of the laws and institutions that govern national and international communities and many of us will be accustomed to it—it is how it works, so to speak. Those deeper aspects are discussed in other parts of this web site’s section on trade, economy, & related issues.
That is not to belittle the issue of corruption, however, for its impacts are enormous too.
Globalization, Multinational Corporations, and Corruption
Corruption scandals that sometimes make headline news in Western media can often be worse in developing countries. This is especially the case (as the previous link argues) when it is multinational companies going into poorer countries to do business. The international business environment, encouraged by a form of globalization that is heavily influenced by the wealthier and more powerful countries in the world makes it easier for multinationals to make profit and even for a few countries to benefit. However, some policies behind globalization appear to encourage and exacerbate corruption as accountability of governments and companies have been reduced along the way. For example,
Dr Hawley also lists a number of impacts that multinationals’ corrupt practices have on the South (another term for Third World, or developing countries), including:
They undermine development and exacerbate inequality and poverty.
They disadvantage smaller domestic firms.
They transfer money that could be put towards poverty eradication into the hands of the rich.
They distort decision-making in favor of projects that benefit the few rather than the many.
Benefit the company, not the country;
Bypass local democratic processes;
Damage the environment;
Circumvent legislation; and
Promote weapons sales.
(See the previous report for detailed explanation on all these aspects.)
IMF and World Bank Policies that Encourage Corruption
At a deeper level are the policies that form the backbone to globalization. These policies are often prescribed by international institutions such as the World Bank and IMF. For years, they have received sharp criticism for exacerbating poverty through policies such as Structural Adjustment, rapid deregulation and opening barriers to trade before poorer countries are economic ready to do so. This has also created situations ripe for corruption to flourish:
Jubilee Research (formerly the prominent Jubilee 2000 debt relief campaign organization) has similar criticisms, and is also worth quoting at length:
And in terms of how lack of transparency by the international institutions contributes to so much corruption structured into the system, Hanlon and Pettifor continue in the same report as cited above:
As further detailed by Hanlon and Pettifor, Christian Aid partners (a coalition of development organizations), argued that top-down conditionality has undermined democracy by making elected governments accountable to Washington-based institutions instead of to their own people. The potential for unaccountability and corruption therefore increases as well.
One of the pillars of democracy is transparency; knowing what goes on in society and being able to make informed decisions should improve participation and also check unaccountability.
The above-cited report by Hanlon and Pettifor also highlights a broader way to try and tackle corruption by attempting to provide a more just, democratic and transparent process in terms of relations between donor nations and their creditors:
Address weaknesses in the global system
Improve Government Budget Transparency
A trusted government is more likely to result in a positive political and economic environment, which is crucial for developing countries, as well as already industrialized ones.