Corruption in Developed and Developing Countries

Four strategies have been employed in the past by successive governments to deal with corruption, usually with varying degrees of success. These are societal, legal, market, and political strategies.

In the societal strategy, each society defines a common standard of morality, which can then be employed to determine if a given behavior qualifies as corrupt. Civil society is encouraged to remain vigilant and watch out for individuals who engage in corruption and report them to the police. The government and civil society organizations are expected to educate the general public about corruption and its negative effects on economic growth and development. Through such an educational program, citizens can significantly improve their ability to determine if behavior is corrupt and report perpetuators to the relevant authorities for further action. The private press plays an important role in this approach to corruption cleanup—it investigates and exposes corruption, paving the way for the police to gather the evidence needed for effective prosecution by the judiciary.

In the legal approach, the judiciary, the police, and the mass media are expected to lead the fight against corruption. First, national laws define the responsibilities of civil servants and properly constrain them in the performance of their duties. Second, the law defines corruption and corrupt behavior. Third, citizens are encouraged to be vigilant and report any suspected corrupt activities to the police. Fourth, the police are expected to thoroughly investigate such activities, gather the necessary information, and present the latter to the judiciary. Fifth, the judiciary then prosecutes the accused and imposes the appropriate punishment if found guilty. Special commissions of inquiry or special prosecutors can be constituted and used by the government to investigate incidents that point to large-scale corruption and public malfeasance. Commissions of inquiry are especially important in cases where high-ranking officials have been implicated in corruption.

Police and judiciary officers can only perform their functions properly and efficiently if they are not corrupt—that is, they are effectively constrained by the law. If, on the other hand, these institutions are pervaded by corruption, it would be prudent to first engage in reforms to improve their efficiency before engaging them in the fight against corruption.

In many developing countries, low salaries for public servants have been given as a reason why some of these workers may engage in corruption. As part of the effort to minimize corruption in the civil service, it has been suggested that pay scales in the public sector be made competitive with those in the private sector. One must note, however, that higher pay in the public sector may simply force opportunistic civil servants to demand higher bribes to compensate for the probability of losing what is now a relatively more important and lucrative position. It has also been suggested that any civil-service reforms be supplemented with counteracting agencies such as an independent judiciary or some kind of independent review board, an ombudsman, or other investigative body. One must consider the fact that such bodies can become politicized (as evidence from many developed and developing countries shows) and used by incumbent ruling coalitions to punish the opposition and continue to monopolize political spaces.

The market approach to corruption cleanup is based on the belief that there exists a discernible relationship between market structure and corruption. Government regulation of private exchange creates opportunities for regulators to extort bribes from enterprise owners. The remedy that scholars have usually recommended is decreased government regulation and more reliance on markets for the allocation of resources. Such an approach has at least two problems. First, it is based on the manipulation of outcomes within an existing or given incentive structure (i.e., existing institutional arrangements). Second, the problem here is not with the market but with the incentive structures that traders are facing. Rules define the incentive structure faced by participants in markets and, hence, determine the behavior of these traders and market outcomes. If the government's regulatory activities are reduced and resource allocation made more dependent on the market, there is not likely to be much of a change in outcomes if the incentive structure has not been altered. The most effective way to minimize opportunistic behaviors, including corruption, is to reform or modify existing rules and, by implication, change the incentives faced by traders. Changing or modifying the rules does not imply deregulation, but reconstitution and reconstruction of the state through democratic constitution-making to provide transparent, participatory, and accountable governance and economic structures.

The political strategy emphasizes decentralization of power and argues that the concentration of power in the center enhances the ability of the ruling coalition to engage in corrupt activities. The recommendation is that the public sector be made more transparent. For example, the public budget process should be made more open and participatory and the outcome (i.e., the budget) should be published and made available to the mass media and any other interested individuals and groups. Unfortunately, such reforms can easily be reversed (and power reconcentrated in the center) by subsequent governments in response to lobbying from interest groups.

Traditional approaches to corruption control depend on the effectiveness and professionalism of the country's counteracting institutions (e.g., the police, judiciary, and the mass media). It is assumed that institutions such as the police and judiciary are well constrained by the law and that they are free of corruption. First, a significantly large number of countries around the world do not have fully functioning private media that are free to investigate and expose corruption without fear of censure by the incumbent government.

Second, the judiciary systems of many countries are not independent of the executive branch of government. Instead, the country's chief executive controls the judiciary and retains the power to appoint and dismiss judiciary officers.

Third, many public institutions, especially in the developing countries, are pervaded by high levels of corruption. Hence, a corruption cleanup program developed and implemented by any of these institutions is not likely to be successful. An effective anticorruption program, then, must begin with the selection of appropriate new rules that (1) constrain the exercise of government agency and (2) provide the necessary foundation for the design and adoption of new and more effective counteracting agencies (e.g., an independent judiciary, a well-constrained police force, a professional and neutral military, an independent central bank, a free press, etc.).