Curing the ‘Bigger C’

MAPping the Future

Curing the ‘Bigger C’

By Ronald U. Mendoza

In this article, I refer to cancer of a much larger and more pernicious nature. Thankfully, possible cures for Corruption are now also being developed in a growing number of countries across the industrialized and developing world.

A few weeks ago, the National Anti-Corruption Commission of Thailand held a two-day policy research conference on “Evidence Based Anti-Corruption Policies,” bringing together over 300 researchers and policymakers from over 15 countries.

The discussions there highlighted several critical elements in a more effective campaign against corruption. To my mind, these are also highly relevant in our country’s present renewed effort to stamp out this social cancer. Here, I will build on what I took away from that conference as a small contribution to the broader anti-corruption effort.

First and foremost, the discussions emphasized that corruption has become much more sophisticated. Corruption is no longer just about bribe-taking or kickbacks. In many countries, it has permeated policy making to its very core, affecting the nature of policy choice and design. For example, Thailand’s recent reversal of its income guarantee reforms (i.e., policies to ensure a minimum income level for poor households implemented during Prime Minister Abhisit’s term) may signal a reversion to rice market intervention as a way to manage prices. The latter is a prime example of policy design that is much more “corruption friendly” in the words of Abhisit. We in the Philippines can very much relate.

While it receives far less attention, smarter and “corruption unfriendly” policies can also help change the public policy landscape, making it much less conducive to corruption. Essentially, income guarantees are not only less market-distorting, they are also less prone to the types of large-scale corruption in direct market intervention measures. Of course, transparent and well-managed social welfare programs (which include the income guarantee programs) will also help minimize the potential for corruption on that side.

Our research at the Asian Institute of Management also suggests that some types of public spending tend to be much more conducive to kickbacks and corrupt deals (e.g., large infrastructure deals and military spending). Empirical evidence suggests that public spending in these areas tends not to get cut (or is cut by much less) during economic downturns, even as social sector investments suffer the ax. This could skew government policies and public finance toward sectors and projects that don’t necessarily produce the “biggest bang for our buck.” Not only are these policies inefficient, they also tend to be highly inequitable (since most sectors that are more “corruption friendly” are also less directly linked to poor and low-income families’ benefits). It is no coincidence that policies that are more prone to corruption are also quite weak in their poverty-reducing impact. Clearly, anti-corruption is not just about the absence of bribery, it is fundamentally about the application of smarter policy.

Researchers were also challenged to move beyond macro-measures of corruption. By now, there are a number of corruption perception measures, which help to illustrate how pervasive the challenge is. Transparency International’s Corruption Perception Index and the International Crisis Risk Group’s “control of corruption” indicator are examples. While useful, these measures don’t yet capture finer details on the nature and extent of corruption, as well as its costs to the economy and society writ large. Measures on specific types of corruption as well as the geographic areas and economic sectors affected could help policymakers and civil society groups better track how effectively countries are able to reduce corruption. We have to track not just perceptions, but also concrete experiences of corruption in order to better understand how to curb it. Key innovations in other countries now include websites, like www.ipaidabribe.com in India, which not only exposes corrupt practices but also provides researchers and policymakers a wealth of information and data from those directly affected.

The discussions also underscored the need to engage ordinary citizens in sustaining the fight against corruption. Supply-side interventions are necessary and the government should rightly address them. Public and private sector managers can dramatically change the complexion of governance in the country by being paragons of example themselves. Ultimately, however, reforms will be sustained not merely by any single government, but by broad and inclusive coalitions of reform that directly engage the citizenry in sustaining the push for clean government, and indeed also clean and fair markets. Corruption, after all, is not only in the public sector but permeates all of society and is definitely anathema to a well-functioning market economy.

I thought it interesting that Thailand has even taken exceptional measures to develop educational materials in order to instill stronger anti-corruption and good governance views among their young people. In the words of one of Thailand’s Anti-Corruption commissioners, they seek to create a common value against corruption in an effort to strengthen the “immune system” of future Thai adults against corruption.

Finally and perhaps most critical, international evidence on promoting citizen engagement against corruption points to a singular key ingredient: access to information. Indeed, international evidence suggests that countries with much more transparent and participatory policy making processes, with systems that afford broader access to information on the workings of government, tend to have less leeway for corruption, and make policies much less “corruption friendly” and much more well designed and pro-poor.

Perhaps, if our leaders can only leave one mark on the anti-corruption effort, let it be a well-conceived and -implemented Freedom of Information Law. Simply put, to curb corruption, evidence is necessary. And to develop strong evidence, access to data and information will be critical. An environment wherein citizens have access to information not holds public sector managers more directly to account. More critically, such access to information can also empower our citizens to engage more effectively in our democracy.

(The article reflects the personal opinion of the author and it does not reflect the official stand of the Management Association of the Philippines. The author is associate professor of economics at the Asian Institute of Management and executive director of the AIM Policy Center. Prior to joining AIM, he was a senior economist with the United Nations in New York. Feedback at map@globelines.com.ph. For previous articles, visit map.org.ph.)