Transparency International believes that corruption hurts development and that discounting the effects of corruption will only make it harder to improve the lives of the most vulnerable.
The Gates Foundation’s Annual Letter dismissed petty bribery as an acceptable small tax on aid and commentators Jason Hickel on Al Jazeera and Charles Kenny in Bloomberg Businessweek asserted that corruption isn’t as massive a barrier to development as people make it out to be.
The facts, however, tell a different story. Here we dispel five myths about corruption and development for the sake of the many millions who are kept in poverty because of it:
Myth 1: The size of small-scale corruption is small
In various countries around the world, having to pay an official to access the public health system, police services or education can be a daily occurrence. More than one in four of the 114,000 people surveyed in our 2013 Global Corruption Barometer reported having to pay a bribe to access the most basic services.
While the size of individual payments may be small, adding them up over time paints a different picture: a 2012 study showed that Mexicans paid the equivalent of US$2.5 billion in bribes to access basic services in 2010.
These kinds of payments pose a financial burden on individuals, particularly the poor who not only lose a larger share of their income to bribery than wealthier people, but are twice as likely to be asked to pay a bribe.
Myth 2: Corruption has an insignificant impact on human development
Where corruption is prevalent, levels of human development tend to be lower. Our research shows that in countries where bribery is common, progress in meeting the Millennium Development Goals is slower and more people lack basic services.
There are studies from around the world that corroborate these findings. For example, corruption in the Philippines reduces immunisation rates, delays the vaccination of newborns and increases waiting times at health clinics.
In the US, one study found that corruption reduces the amount of money available for higher education. Research on Indonesia showed that public funds in education fail to improve school enrolment rates when they are channelled into regions with high levels of corruption.
Myth 3: Corruption doesn’t affect inequality
Corruption exacerbates the gap between the rich and poor. It creates a political and social system that favours the wealthy and well-connected which, in turn, perpetuates inequality. For example, a 2001 study of African countries found that a one-point worsening in the Corruption Perceptions Index is associated with up to a seven-point increase in the Gini coefficient, the most commonly used measure of inequality.
Put simply, the more corrupt a country is, the more unequal it is. This also holds true for developed countries. One study from the US shows that rising levels of corruption also increase the Gini coefficient and decrease income growth.
It is interesting to note that although Thomas Piketty never mentions the word corruption in his best-selling book on inequality, Capital in the 21st Century, his recommendations to lessen the gap between rich and poor include many of the same recommendations that Transparency International makes for combatting corruption.
Myth 4: Corruption is good for economic growth
Today, a large body of evidence exists to show corruption does not have a positive impact on economic growth by “greasing the wheels” of the economy. For example, corruption is consistently correlated with lower growth rates and income per person, and less economic equality.
Corruption also deters investment and puts off businesses: more than 35 per cent of companies surveyed in 2006 said they had opted out of an attractive investment due to corruption in the host country. Rather than helping grease the wheels, bribery undermines businesses’ productivity more than bureaucracy. Corruption is therefore economically inefficient for companies.
Myth 5: Corruption helps overcome government inefficiency
Corruption undermines the integrity of regulation as it allows corrupt politicians to manipulate the regulatory environment for their own benefit. Studies show that corruption creates incentives for politicians and public officials to set up more regulations in order to have more opportunities to extort payments.
Corruption also undermines the rule of law and corrodes public confidence in the state and the legitimacy of the political system. A culture of bribery demonstrates to the public that the rules are not applied consistently in line with the law.
People who face corruption in their everyday lives clearly know how badly it affects their well-being and livelihoods. It’s no wonder people around the world are demanding better governance.
- For more arguments and evidence on the impact of corruption on growth and inequality, see this Helpdesk answer.
- For more on the impact of corruption on the Millennium Development Goals, see the Transparency International policy brief.
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