Corruption, poverty and democracy

Transparency International (TI) has been publishing its annual flagship report Corruption Perception Index since 1995. The index was estimated for only 41 countries in the first year from the polls of assessments of international businessmen and financial journalists about how they felt about the intensity of corruption in the public sector of these countries. Over time both the rigour of analysis and the sample size increased. By 2001 the number of countries for which the index was estimated increased to 91. Bangladesh was added to the list that year for the first time. Unfortunately it was perceived to be the most corrupt country in the list and was placed in the 91st position.

This greatly irked the then government. It sensed a conspiracy behind the exercise to undermine its reputation. Many in civil society also raised questions about the appropriateness of the methodology and the relevance of the index. Nonetheless TI reports continued to rate Bangladesh the most corrupt country of the world for the next 4 years even though the number of countries increased to 158. Bangladesh climbed out of the bottommost spot in 2006 when it was placed in the 156th position among the 163 countries surveyed. Of the seven countries that had worse corruption records than Bangladesh three were added to the list for the first time.

The corruption perception index (CPI) was estimated for 176 countries in 2016, and Bangladesh was placed in the 147th position with an index value of 26 as shown in the table (zero corruption is indicated by 100). Only 3 of the 26 countries that had a worse corruption index than Bangladesh were in the list in 2001. It may be mentioned that the best record of Bangladesh was the 120th position among 182 countries in 2011 with an index value of 27. Since then it has not improved upon its corruption perception index.

This year's TI report hardly attracted public attention. The shock and novelty of the earlier years have worn off, and the loss of the corruption championship to other minnows has reduced the interest of the media and others that are addicted to sensationalism.

Taken in isolation CPI is not much more than a ranking of countries in order of the intensity of corruption as perceived by some selected individuals. However, when viewed along with some other indices it throws up some interesting analytical issues. The 4th column in the table gives the 2015 per capita gross national income (GNI) in current US dollars as estimated by the World Bank and the 5th column gives the country classification (UN and World Bank). It will be immediately apparent that with a few exceptions all 32 of the countries perceived to be most corrupt of the world including Bangladesh are among the poorest countries of the world in terms of per capita GNI: they are all low income or lower middle income (LMI) countries (by World Bank criterion) and most of them are also least developed countries (LDC) as designated by the United Nations.

A few countries that do not fall in these categories are mostly war-torn countries (W) such as Syria, Iraq and Libya whose economies and institutions were severely disrupted by internal dissent and external interferences. In sharp contrast to this, all the top-20 least corrupt countries of the world are very rich developed countries that are free of violent strife within their borders. The findings lead to the suggestion that there is a correlation between poverty and public sector corruption: governments tend to be more corrupt in poorer countries, and whether internally generated or externally engineered violent strife is a powerful contributor to corruption.

Public corruption is about illegitimate access to resources by abusing official power. When the institutions that act as checks against such abuse of power are absent or weak or made dysfunctional, amassing wealth through improper or illegal means becomes easier. Poor countries are characterised by weak and ineffectual institutions relative to the strength of the government. Hence corruption may be expected to be more prevalent in the poor countries. The average per capita GNI of the most corrupt countries in the table is only $1571, while that of the least corrupt is $54,325.

The prospect of accumulating wealth though the abuse of state power also attracts competing groups who attempt to replace the group in power to have control over the state machinery through elections or otherwise. Well meaning people who want to live in free and fair society also favour unseating corrupt ruling coteries. On their part the people in power want to exclude all others from state power by either resorting to unfair means to rig elections or doing away with multi-party elections altogether by imposing an essentially one party rule with concomitant repressive measures. The excluded parties might then resort to violent means to oppose the government. Hence, it is likely that the poorer countries will have a disproportionate share of authoritarian governments of the world and internal violence.

Some corroboration of this hypothesis may be had from the Democracy Index 2016 report of the venerated weekly magazine The Economist that classifies countries into four groups in terms of their democratic credentials. These are in order of the strength of their democratic practices: full democracy (19 countries), flawed democracy (57 countries), hybrid (40 countries) and authoritarian countries (51 countries).

Full democracies (D) have basic political freedoms and civil liberties. Elections are free and fair with wide participation. Media are independent and there are checks and balances to executive authorities. The judiciary is independent. Some of these features are weak in a flawed democracy (F). There may be infringements on the media and low level of political participation. In a hybrid regime (H) elections are not free and fair and the opposition is repressed, often through brutal force. Rule of law and media are weak and corruption is rampant. Political pluralism is mostly absent in an authoritarian regime (A). Elections, if held at all are rigged and the media is muzzled. These countries are in essence dictatorships.

The democratic classification of each country according to the criteria above is shown against it in column 5 of the table. Only 9 of the 31 countries that are as much, or more, corrupt than Bangladesh have hybrid regimes, the rest are dictatorships. It would seem that most countries that are highly corrupt cannot host democratic regimes, even the flawed ones. In contrast the countries that are the least corrupt have mostly full democracies, only a few are flawed democracies. The most recent addition to flawed democracy is USA.

The findings above indicate a general pattern: countries that are poor tend to be corrupt, and countries that are corrupt tend to be more authoritarian. When one looks at the entire range of countries for which data are available some deviations from this pattern will be observed, but these will not invalidate it.

An implication of the pattern is that the standard of living of a poor country will be difficult to improve without a reduction in corruption, and it will be difficult to reduce corruption without stronger democratic culture. Far from being a hindrance to economic growth, democracy is actually conducive to sustainable growth.