CORRUPTION & PUBLIC POLICY

AN INTERNATIONAL PERSPECTIVE
Ary Ferreira da Cunha

SUMMARY
1. Introduction
2. Definition
3. Causes
4. Consequences
5. Solutions

INTRODUCTION

I am always ready to learn,

although I do not always like
being taught
W. Churchill

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INTRODUCTION

Corruption Perception Index in the EU

100

80

60

40

20

Nordics
Eastern
Central Europe
Southern
IONA

Source: Transparency International, 2014

INTRODUCTION

INTRODUCTION

INTRODUCTION

Suharto: $15-35B Al-Bashir: $9B Marcos: $5-10B Mobutu Seko: $5B Dos Santos: $20B

INTRODUCTION
Whats the goal?
New Conversations:
a) Focuses on solving problems;
b) Informed;
c) Over focus on specific cases;
d) Assigning blame and promoting stereotypes.

DEFINITION
Corruption
a) Legal Concept
b) Sociologic, Economic, Political Concept
- Abuse of private or public office;
- To get an advantage or avoid a disadvantage;
- For oneself or to a third party.

CAUSES
Agency Theory
Principal-Agent-Client Model

a) Discretion;
Monopolies; checks&balances; patrimonial notion of the office

b) Information Asymmetries;
Transparency; media; freedom of information

c) Non-Coincidence of Interests.
Income; third party dependence

CAUSES
a) Cultural?
- Yes and no. Social Trust.
- Patrimonial notion of office
- Histeresis.

b) Is there something we can do?

- Yes. There are success stories.

CONSEQUENCES
a) Positive(?)
- Proxy for deregulation;
- Resist unfair laws.

b) Negative
- Competitiveness;
- Development;
- Social Trust
- Other Relevant Interests.

CONSEQUENCES
a) Competitiveness of the Private and Public Sectors
- Bribes vs Taxes (uncertainty)
- Foreign Direct Investment (Singapore-Mexico: 20%);
- Talent Allocation;
- Productivity;
- Administrative inefficiency;
- Tax revenue;
- Economical Openness.

CONSEQUENCES

b) Development
- Literacy, infant mortality; expenditure on education and health;
- Economic growth;
- Income inequality.

CONSEQUENCES
c) Social Trust
- Civic Participation;
- Scale of businesses;
- Tax Fraud;
- Solidarity.

CONSEQUENCES
d) Other Relevant Interests
- Health and Education;
- Safety;
- Environment;
- National Defense;
- Competition;
- Electoral.

SOLUTIONS

Myth #1
Some countries are corrupted,
while others are clean.

SOLUTIONS
Corruption Perception Index
100
80
60
40
20

Portugal
Hungary

Denmark
Brazil

Germany
Angola

0
2000 2002 2004 2006 2008 2010 2012 2014

Source: Transparency International, 2000-2014

SOLUTIONS

Myth #2
Poor countries will always be
corrupted.

SOLUTIONS
Corruption Perception Index
100
80
60
40
20

Germany

Chile

Barbados

0
2000 2002 2004 2006 2008 2010 2012 2014

Source: Transparency International, 2000-2014

SOLUTIONS
Corruption Perception Index
100
80
60
40
20

Portugal

Italy

Botswana

0
2000 2002 2004 2006 2008 2010 2012 2014

Source: Transparency International, 2000-2014

SOLUTIONS
Corruption Perception Index
100
80
60
40
20

Italy

Ghana

0
2000 2002 2004 2006 2008 2010 2012 2014

Source: Transparency International, 2000-2014

SOLUTIONS

Myth #3
Corrupt countries will always be
corrupt.

SOLUTIONS
Corruption Perception Index
100
80
60
40
20

Georgia
Libria

Angola

Indonsia

0
2003

2005

2007

2009

2011

2013

Source: Transparency International, 2003-2014

SOLUTIONS
Corruption Perception Index
100
80
60
40
20

Estonia

Litunia

Polnia

0
1998 2000 2002 2004 2006 2008 2010 2012 2014

Source: Transparency International, 1998-2014

SOLUTIONS

Myth #4
Clean countries will always be
clean.

SOLUTIONS
Corruption Perception Index
60
48
36
24
12

Syria

Eritrea

Belarus

Italy

0
2002

2004

2006

2008

2010

2012

2014

Source: Transparency International, 2002-2014

SOLUTIONS
FIGHTING CORRUPTION =
- MONOPOLY
- DISCRETION
+ ACCOUNTABILITY
(Robert Klitgaard)

SOLUTIONS
FIGHTING CORRUPTION=
REPRESSION
+PREVENTION
+EDUCATION
(Independent Commission Against Corruption)

SOLUTIONS
DISCRETION

NON-COINCIDENCE
OF INTERESTS

INFORMATION
ASYMMETRIES

SOLUTIONS
Limits and Procedures

Renegociation of Limits and Procedures

Sanctions, Rewards,
Conflicts of Interest,
Internalization of Norms

Checks and
Balances

Competition

Participation

Transparency e
Whistleblowing

SOLUTIONS
Codify Political
Duties

Introduce Mechanisms
for Renegotiation (?)

Regulate Conflicts
of Interest
Pay Politicians Better

Mutual
Oversight

Give Voice to
Civil Society

Approve a Freedom
Allow for Independent of Information Law
Facilitate Whistle Blowing
Candidates

SOLUTIONS

What to Change?

When and How to

Introduce Change?

Who drives Change?

DOVE

HAWK

Selection

Control

Long Leash

Short Leash

Just Culture

Blame Culture

Indirect

Direct

Reform

Revolution

Point of Entry

Big Bang

Elites

People

CONCLUSION
Some economies (Singapore, Hong Kong,
Portugal) have managed to reduce the incidence of
corruption significantly. () in Sweden corruption
flourished . . in the second half of the 18th century
and in the early 19th century. Thus, governments
should not be fatalistic or passive about corruption
Vito Tanzi (1998, p. 586)

CONCLUSION
Corruption Perception Index
75
70
65
60
55

Portugal

50
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

Source: Transparency International, 1998-2014

CONCLUSION
- Assigning political blame and dealing on
stereotypes are pointless exercises;
- We need national and international debate, not just
pub rants;
-Fighting corruption is hard, but possible.

CONCLUSION
What can I do?
- Resist the urge the rationalize corrupt behaviour;
- Expose corruption;
- Speak out for policies that improve governance;
- Support groups, parties and politicians with clear ideas on how to
fight corruption;
- Join the fight!

CONTACTS

Ary Ferreira da Cunha

pacunha@porto.ucp.pt