Corruption Research Paper

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Ancient philosophers and poets described corruption as part of the human behavior and therefore as almost endemic in every community. However, it was only in the 1990s that corruption began to attract the interest of scholars, governments, international organizations, and NGOs. Since then, a far-reaching debate has developed on the issue, giving rise to a large number of academic publications and political programs.

The most important issues of this debate are examined in this research paper. In particular, section “Defining and Classifying Corruption” provides a review of the numerous definitions and classifications of corruption adopted in the literature. Section “Measuring Corruption” discusses the main difficulties in measuring corruption, while section “Understanding Corruption” reviews the cultural, institutional, and economic models developed by researchers to interpret the causes and the effects of corruption. Section “Experiencing Corruption” provides a summary of corruption experiences across regions and sectors, and section “Policing Corruption” finally suggests policy and regulatory strategies with which to prevent and combat corrupt practices worldwide.

Defining And Classifying Corruption

Before analyzing the various aspects of corruption, it is necessary to define the phenomenon. Quite frequent in the literature is the definition of corruption as the abuse of power for private gain. This definition implies the existence of three elements – namely, power, abuse, and private gain – that are worth discussing in detail.

Firstly, a precondition for corruption is the existence of a person who is somehow entrusted with discretionary power, i.e., the authority to allocate scarce benefits or to provide restricted goods or services (Rose-Ackerman 1978). Secondly, an abuse, i.e., a violation of the role assigned to this entrusted person, must be committed. Finally, the abuse of the role must be intended to obtain some kind of private benefit, i.e., an advantage for the entrusted person or a third party (Rose-Ackerman 1978). To be noted in this regard is that the nature of the private gain may vary (UNODC 2011): it may be tangible (e.g., a house) or intangible (e.g., a career advancement) and it may take the form of monetary payment (e.g., a bribe in cash) or in-kind compensation (e.g., food and drink, sex, preferential treatment, a job).

However, the above definition is still very broad. In an attempt to specify it better, researchers have often resorted to certain operational classifications which have proved fruitful and are now summarized.

Active Versus Passive Corruption

The first classification regards the distinction between active and passive corruption. Active corruption refers to the supply side of the corrupt transaction, i.e., the party who offers, promises, or gives an undue advantage to the person entrusted with discretionary power so that the latter abuses his/her role (e.g., a company promising a bribe to a public official in order to be selected in a public bidding process). By contrast, passive corruption concerns the demand side, i.e., the party who requires, receives, or accepts the undue advantage (in this case, the public official).

This classification is not intended to identify who instigates the act (the corruptor) (European Commission 2011: 6). With reference to bribes, for example, the “initiative for bribing can originate with the bribe giver or the bribe taker,” the latter case being often regarded as extortion (Transparency International 2006: 16). To be noted, moreover, is that in many criminal justice systems, both behaviors are punished.

Public Versus Private Corruption

Depending on whether the entrusted power is abused by a public official (e.g., a politician or a civil servant) or a private party (e.g., a company executive), it is possible also to distinguish respectively between public corruption and private corruption.

Private corruption involves only individuals operating in the private sector (“private-to-private” corruption), while public corruption is generally defined as the abuse of public office for private gain (Tanzi 1998: 564). In this sense, depending on whether the public official is a civil servant or a politician, public corruption can be further distinguished between administrative (or bureaucratic) and political corruption.

Administrative corruption generally affects the legal implementation of laws, regulations, and/or policies, while political corruption mainly concerns their formulation. Political corruption frequently involves the electoral cycle, implying, for example, practices of buying/selling votes and/or affecting election funding (Transparency International 2006). On the other hand, in administrative corruption cases, civil servants may act “according to the rules” (e.g., they receive a bribe to accelerate an authorization process) or “against the rules” (e.g., they are corrupted to break the law) (Pope 2000).

Grand Versus Petty Corruption

The third operational classification refers to the extent of the corrupt practice: grand corruption generally occurs at the highest level of government, affecting the decision-making process; and, as such, it usually involves large sums of money. By contrast, petty corruption usually occurs at the administrative level. This is, for example, the case of a low-ranking public official who accepts or extorts a bribe of a small amount from an individual (European Commission 2011).

To be noted is that petty corruption may be indicative of broader and more dangerous grand corruption schemes occurring at higher levels of governance (Pope 2000: XIX). Moreover, it should be stressed that the amount of money paid is not necessarily related to the extent of damage caused by corruption. As pointed out by many authors, small bribes may have big consequences (Rose-Ackerman 2003).

Some other authors (see, e.g., Tanzi 1998: 565) do not distinguish between administrative and petty corruption and between political and grand corruption. Moreover, further operational classifications exist, referring, for example, to the spread of corrupt acts in a certain community (structural vs. situational corruption), to its frequency (isolated vs. systemic), or to its nature (cash vs. in-kind corruption, see above). Consequently, it is difficult to reach universal consensus on how to define corruption. This consideration also applies to the legal definitions of corruption.

Legal Definitions

Contrary to the categories analyzed so far, legal definitions of corruption do not provide broad classifications, but rather focus on identifying those corruption-related criminal acts (such as bribery, embezzlement, fraud, unfair competition) which can be recognized as criminal offenses and hence prosecuted.

It should be accordingly emphasized that finding a legal definition of corruption with a maximum of consistency across countries is very difficult, given that different labels and headings are adopted in different jurisdictions (Jehle and Harrendorf 2010: 160). This is all the more the case of private corruption: in fact, while public corruption exists as a criminal act in almost all jurisdictions, private corruption often appears under different labels (e.g., unfair competition).

Many conventions have been adopted at regional and international levels in an attempt to provide a legal framework within which to prevent and prosecute corruption. However, the scope of their provisions varies greatly. Some of them (i.e., the UN Convention against Corruption and the Council of Europe’s Criminal Law Convention on Corruption) cover a broad range of offenses extending from active and passive briberies of foreign and national officials to embezzlement, illicit enrichment, obstruction of justice, and trading in influence. Others (such as the OECD Convention on Combating Bribery of Foreign Public Officials in the International Business Transactions) are instead highly specific in their scope, in that they criminalize only certain kinds of corrupt practices (i.e., the promising, offering, or giving of a bribe to foreign public officials) (OECD 2008).

Moreover, not all the provisions are mandatory. Some of them are optional, which means that signatory states have only to take account of their potential implementation (OECD 2008: 14). As a consequence, some jurisdictions do not establish certain corrupt practices as specific criminal offenses and therefore do not even prosecute them.

Measuring Corruption

Having defined corruption and in order to gain better understanding of its causes and consequences, it is necessary to quantify its extent. But measuring corruption is not an easy task. Firstly, what is measured depends exactly on how corruption is defined; and as seen above, various classifications are possible. Moreover, there are a number of methodological challenges which apply not only to direct measurements, such as administrative statistics, but also to more indirect measurements of corruption such as experts’ assessments or victimization surveys. These problems are now reviewed.

Administrative Statistics

Firstly, corruption, like other non-conventional crimes, is a concealed form of behavior difficult to detect. Administrative statistics, such as police or prosecution data on cases of corruption, enable the most direct measurement of the phenomenon, but they represent only a fraction of the actual magnitude of the crime because many offenses are not discovered or not reported to the relevant authorities (the so-called dark number).

The dark figure of corruption is usually higher than for other offenses. It is so for two main reasons. Firstly, in comparison with more conventional crimes (e.g., burglary, theft, robbery), victims of corruption are less likely to report the offense, either because they perceive these behaviors as normal practices and are reluctant to modify them or because they themselves are somehow involved in the offense (e.g., they have paid a bribe requested by a public official) (UNODC 2009). Secondly, in comparison with other crimes, the boundaries between illicit and licit conducts may not be easily distinguished, so that it is difficult for a victim to understand whether or not a behavior should be reported (UNODC 2009; Recanatini 2011).

Cross-country measurements of corruption are even more problematic since, as noted above, there is no common definition of corruption across different jurisdictions (Jehle and Harrendorf 2010: 160). For example, only half of the 42 European countries covered by the European Sourcebook of Crime and Criminal Justice Statistics could provide police and prosecution data on public corruption (Aebi et al. 2010: 83), and the way in which this offense is defined differs markedly from country to country (Aebi et al. 2010: 34). Besides legal definition problems, also cultural factors (e.g., the differing likelihood that citizens will report offenses to the police) and statistical ones (e.g., the statistical counting rules used to collect crime data) often hamper cross-country measurements of the phenomenon.

Indirect And Alternative Measures

Owing to all these problems, official data on reported cases of corruption do not provide a reliable picture of the actual magnitude of the phenomenon. Hence, alternative and indirect measures of corruption should be considered, such as composite indicators, sample surveys, and experts’ assessments.

Composite Indicators

This approach combines different variables and information in a single index so as to provide a synthetic measure of corruption in a certain country or region. One of the most popular composite indicators is the CPI – Corruption Perception Index – developed by Transparency International, which combines different sources such as polls, experts’ assessments, and media reports. It has been calculated on a yearly basis since 1995 and in 2012 covered 176 countries ( Other indicators are the Corruption Control Indicator (CCI), one of the six Worldwide Governance Indicators developed by the World Bank, or the Global Integrity Index (GII), produced by Global Integrity.

Composite indicators provide a synthetic measure of the corruption level and also make it possible to produce comparisons across countries and over time. However, they also have weaknesses. Firstly, they usually measure how corruption is perceived by a range of subjects (experts, public officials, researchers, journalists, the public) rather than the actual level of corruption itself. Secondly, they combine information from different sources referring to different topics (e.g., corruption, governance, press freedom, company transparency), with the consequence that it is sometimes difficult to understand what exactly these indicators measure. Finally, the construction of these indicators entails a number of methodological choices (e.g., selecting sources, selecting how to weight the average in computing the results) which increase the level of subjectivity of these measurements (UNODC 2009: 5).

Sample Surveys

Indirect measures of corruption are also provided by sample surveys. These may be carried out on a number of subjects, interviewed both as witnesses of corruption events and/or as victims (in so-called victimization surveys). Respondents can usually be distinguished into three categories: households, businesses, and public officials. While households are usually interviewed as victims of petty corruption practices, business surveys are addressed to business executives or employees, who are asked to report their experiences of corruption during their corporate activities. Civil servants or public officials are asked for information on various issues, including corruption in recruitment and promotion practices, job mobility, training frequency, work incentives, salary, and wages.

The main advantage of sample surveys is that, with respect to official statistics, they usually present a lower “dark number,” since they are anonymous. The respondents are therefore less reluctant to provide information on their experiences of corruption than they are when dealing with the police. Surveys can therefore provide a more reliable picture of the actual extent of corruption in a country or sector.

Another strength is that they allow the collection of both quantitative and qualitative information. The former makes it possible, among other things, to compute prevalence rates in a certain region or business area (e.g., the share of a population of individuals and/or companies that paid a bribe in the previous year); the latter sheds light, for example, on the types of corruption (e.g., in cash, in kind; see section on “Defining and Classifying Corruption”), on the amounts of money involved (e.g., average percentage of the GDP per capita paid in bribes), and on the nature and characteristics of the victims or the offenders (e.g., gender, age, social status, job position).

However, sample surveys also have weaknesses. Firstly, given the reluctance of victims of corruption to report it (see section on “Administrative Statistics”), also victimization surveys have their own “dark figure.” Consequently, the sample size should usually be larger than in other surveys measuring other types of offense. Secondly, certain types of corruption (e.g., embezzlement, unfair competition, abuse of function) do not generate individual victims, so that it is not possible to apply victimization surveys in these cases. Thirdly, the results may vary considerably depending on the sampling method adopted: for example, overweighting small and medium enterprises (SMEs) in business victimization surveys may result in higher corruption levels given the higher vulnerability to corruption of SMEs compared with larger companies (UNIDO and UNODC 2007: 7).

Despite these limitations, the importance of sample surveys in measuring corruption has been widely recognized, and in recent years various investigations have been specifically focused on this crime, such as UNODC’s surveys on households and businesses in the Western Balkans, Afghanistan, and in several African countries (UNODC 2009: 7), the Crime and Corruption Business Surveys (CCBS), as well as the HEUNI study on the Finnish-Russian border.

Also to be mentioned are business victimization surveys which measure corruption together with other types of crime, such as the International Commercial Crime Survey (ICCS), the International Crime against Businesses Survey (ICBS), the EU Business Victimization Survey, the Swiss BCS, and the Mexican BCS.

Experts’ Assessments

Another approach to measuring the perception of corruption is based on assessments by experts, who are asked to provide a quantification of the level of corruption (or of its trends) in selected regions or countries. Given its mainly qualitative nature, this methodology entails a high degree of subjectivity and a weak statistical significance. Nevertheless, it is an inexpensive and easy-to-perform instrument with which policy makers can obtain an overview of the phenomenon and collect further insights and suggestions.

Expert assessments are often performed by commercial risk rating agencies, consulting groups, media companies (e.g., Economist Intelligence Units) and international organizations, such as the World Bank (World Development Report and the Enterprise Survey), the WEF (Executive Opinion Survey), and the EBRD (Business Environment and Enterprises Performance Survey).

Understanding Corruption

Now that corruption has been defined and the main difficulties in its measurement have been described, this section focuses on the causes and effects of corruption through an overview of the main theoretical models and empirical studies developed by researchers in the field.

Models And Theories

Theoretical models used to explain corruption are usually drawn from economic theory or political sciences, and they may be considered as derivations of Becker’s “crime and punishment” theory.

Generally speaking, these models envisage the coexistence of several elements: first, the presence of someone with discretionary power (see section on “Defining and Classifying Corruption”); second, the existence of economic rents associated with this discretionary power; and third, the presence of a system of sanctions in case of violations. More recently, further elements have been introduced, such as an information asymmetry and/or a lack of enforcement, which make it difficult to monitor persons with discretionary power.

Although a large number of theoretical models have been developed (for a review see Bardhan 1997), two main categories can be distinguished and are now described:

Principal-Agent Models

In principal-agent models, the principal delegates to an agent some discretionary power in allocating resources and/or administrating the regulation that the agent could use for his/her own interest rather than for the principal’s sake. Classic examples are the electorate (principal) that elects a legislator (agent) or a city mayor (principal) who delegates discretionary power to a public official (agent).

In the case of corruption, a triple relationship can be identified among a principal, an agent, and a client (Klitgaard 1988). The principal gives the agent the power to pay a premium to a client who satisfies the principal’s interest (e.g., the electorate delegates a public official to select the most efficient company in a public procurement procedure), but the agent may choose, in return for a bribe, an inefficient company in contrast with the principal’s interest.

The agent may benefit from the high monitoring costs that the principal must bear or from some information asymmetry (e.g., the principal does not know the third party as well as the agent does). In a world of complete information, in fact, the agent could be fully monitored by the principal, and hence, corruption events could be avoided (Rose-Ackerman 1978).

Rent Allocation Models

Public intervention in markets may give rise to rents of different kinds: authorizations to operate a business, licenses to import goods, etc. Entrepreneurs, as rational agents, compete for these rents by devoting time and part of the firm’s resources to the rent-seeking activity (Krueger 1974).

While competition for rents may be absolutely legal, it often takes illegal forms as corruption, bribery, and/or market abuse (e.g., the payment of a bribe to obtain a commercial license). A large number of studies have therefore identified and quantified the costs to the economy of rent-seeking activity (e.g., Krueger 1974).

Empirical Studies

Numerous studies have empirically tested the above-mentioned models in order to determine the causes and consequences of corrupt practices and the factors that influence them.

Advances in the measurement of the level of corruption (see section on “Measuring Corruption”) have undoubtedly improved empirical analysis of the correlation between corruption and a range of explanatory variables. Most of these studies are cross-country investigations adopting composite indicators, such as Transparency International’s CPI, as dependent variables, and other socioeconomic variables as regressors (see Lambsdorff 2006, for a review).

In this regard, it is important to stress that the use of composite indicators as dependent variables is subject to the methodological problems already described in section on “Measuring Corruption”, i.e., the high degree of subjectivity incorporated in such indexes and their hybrid nature comprising not only corruption but also other patterns (e.g., corporate transparency, governance, press freedom). Moreover, even if a significant correlation between the level of corruption and other variables has been identified, it is often difficult to establish the direction of the causality, i.e., to understand whether these variables are the causes or effects of corruption. For example, there is a significant correlation between corruption indicators and GDP per capita, but it is not possible to distinguish clearly whether it is corruption that generates poverty or the latter that facilitates corrupt practices (Lambsdorff 2006).

The determinants and factors correlated with corruption can be divided into three main categories: moral-cultural factors, institutional factors, and economic factors.

Moral-Cultural Determinants

Researchers have firstly sought to understand whether the presence of certain values or norms in some cultures facilitate the acceptance of corrupt practices. For example, the custom of gift giving, either as a form of acknowledgment or as a lubricant, may be accepted in one country but unethical elsewhere (UNODC 2011: 12). Reed (1996: 396) identifies the culture of gift giving and the importance of personal networks as two drivers facilitating the spread of corruption in Japan. Networking also appears important in explaining the high corruption level in Italy, together with other cultural determinants such as the lack of trust in politics, the emergence of business politicians and organized crime (Della Porta 1996).

Also the level of trust within a society has been demonstrated to be closely correlated with corruption, in the sense that a lack of trust among bureaucrats, politicians, and private citizens may incentivize corrupt practices (La Porta et al. 1997). For example, as noted by many authors, where the public has a low opinion of politicians, corruption may be more tolerated because it is considered inevitable (Me´ny 1996: 319). In this sense corrupt practices appear to be more frequent in hierarchical societies (Husted 1999) or in ones dominated by religions which La Porta et al. (1997, p. 337) consider particularly hierarchical: the Catholic, Eastern Orthodox, and Muslim religions. Conversely, higher levels of civic engagement and of media freedom appear to be less correlated with the spread of corruption (e.g., Treisman 2000; Brunetti and Weder 2003).

Interestingly, a negative correlation has been found between corruption and the degree of involvement of women in the society (in the labor force, private and public institutions, etc.), which remains robust at a cross-country level even after controlling for employment status (Swamy et al. 2001).

Institutional Determinants

Institutional determinants of corruption are usually related to the structure or the characteristics of the political system in a given country or region.

According to the principal-agent theory, democracy should guarantee closer control over civil servants by the electorate, thus discouraging corrupt practices. A significant negative correlation between the level of democracy and corruption has been shown by Treisman (2000) in a cross-country analysis. Brunetti and Weder (2003) have confirmed this finding also in a time series dimension.

Key constraints on corruption are the power exerted by the parliament and by political parties. Kunicova and Rose-Ackerman (2005) evidence that parliamentarism, with respect to presidentialism, may provide disincentives to corruption. The same can be shown with respect to the strength of political parties, since weak political groups can facilitate the commission of corrupt practices.

Close attention has been paid to the role of voting systems, i.e., the ways in which an electorate selects and monitors its political delegates. Generally speaking, there is evidence that electoral systems entailing lower competition among politicians, e.g., systems characterized by smaller voting districts or the use of party lists (Persson et al. 2003) or by proportional representation (Kunicova and Rose-Ackerman 2005), are usually correlated with higher corruption levels.

Economic Determinants

However, most empirical studies focus on the economic determinants of corruption (for a comprehensive review, see Lambsdorff 2006).

As anticipated above, resource allocation models hypothesize that public intervention in the economy results in rent-seeking activities, which in their turn may incentivize corrupt practices. However, empirical findings provide little evidence of this relationship (see Lambsdorff 2006, for a review), and there are many exceptions to the model (e.g., Scandinavian countries, which are characterized by very low levels of corruption but large public sectors).

The focus has therefore shifted to the structure of the market: several authors have shown that the level of competition in an economy is negatively correlated with corruption. Corrupt practices are also less frequent in markets characterized by a high degree of openness to international investment and trade (Treisman 2000).

Corrupt practices also appear to be correlated with the level of wages in the public sector, in the sense that low salaries may induce civil servants to supplement them with bribes or illicit fringe benefits. Evidence in this regard has been provided by Klitgaard (1988).

Effects Of Corruption

Besides the causes of corruption, attention has also focused on its effects. A small number of authors suggests that corrupt practices could provide benefits to economies, especially in “greasing the mechanisms” of a society and in avoiding the inefficiencies of bureaucracy.

However, most studies have concentrated on the negative consequences of corruption. Firstly, it harms the job market: in the presence of corrupt practices, human resources are allocated inefficiently and without meritocratic criteria. Corruption has also been demonstrated to be detrimental to investments in education (Gupta et al. 2002). Secondly, the ineffectiveness of public expenditure has been recognized as well (see RoseAckerman, for a review): corruption distorts the system of public procurements, so that it fails to minimize the costs and maximize the quality of the services provided to the community (e.g., corrupt public officials do not select the best company in public bids). Accordingly, corruption may also lead to an uncontrolled growth of public expenditure (Tanzi and Davoodi 1997).

Also distortions are negative results of corruption. For example, distortions in the allocation of public and private resources: corrupt policy makers may divert public resources to unproductive, profit-seeking (DUP) activities (e.g., large-scale infrastructural projects instead of investments in research, innovation, education) (Tanzi and Davoodi 1997). Secondly, distortions occur in the distribution of wealth: corrupt practices incentivize the redistribution of wealth to non-deserving subjects. Gupta et al. (2002) provide evidence of a strong correlation between corruption and increased inequality within the population. High corruption rates may also spur the growth of illegal activities (e.g., black marketeering) and discourage Foreign Direct Investments (FDI), because corruption in the recipient country has proved detrimental to investments by foreign countries and multinationals (Wei 2000).

Experiencing Corruption

While section “Understanding Corruption” reviewed theories and empirical studies so as to understand the causes and the effects of corruption, this section provides an overview of corruption experiences across countries and markets.

Corruption Across Countries

In the 1960s and the 1970s, corruption was perceived as a “disease” mainly affecting developing countries. Most early empirical and theoretical studies focused on emerging regions (Krueger 1974; Bardhan 1997, for a review), demonstrating that corruption was a major obstacle to their development and, as described in section on “Understanding Corruption,” a cause of inequality and the ineffective allocation of financial resources and wealth distribution (Tanzi and Davoodi 1997; Gupta et al. 2002).

Attention has been also paid to communist and post-communist countries. Researchers have often hypothesized that communism provided structural incentives for corruption (Sandholtz and Taagepera 2005) which the transition to market economies has not been able to dismantle. On the other hand, the privatization process in these countries during the 1990s offered numerous opportunities for corrupt practices (Rousso and Steves 2006).

Developing and post-communist countries are invariably ranked in the lowest positions by corruption composite indicators such as Transparency International CPI. In these countries, corruption is often perceived as the most severe problem after poverty and unemployment (UNODC 2011: 7). Consequently, for the past 50 years, local governments, international organizations, and NGOS have pursued two objectives: the development of mass programs to eradicate corruption (see section on “Policing Corruption”) and the conduct of large-scale surveys to collect more detailed measurements and information (especially concerning “petty” corruption).

As regards the latter, surveys have been carried out by UNODC in several African countries (for a review, see UNODC 2009: 7) and by the World Bank in African and Central and South American countries (see Recanatini 2011, for a review). As regards communist and post-communist countries, studies by UNODC have investigated corruption practices in Afghanistan, Albania, Bosnia and Herzegovina, Croatia, Kosovo, Montenegro, Serbia, and FYR Macedonia (UNODC 2011). Close attention has also been paid to Russia and, more recently, China (see, e.g., Sandholtz and Taagepera 2005).

However, Western countries are not immune to corruption. In the 1980s and the 1990s, major scandals involving cases of “grand” corruption (such as the Italian Tangentopoli (Bribesville) scandal of 1992–1995) induced researchers to study corrupt practices in Western Europe, highlighting the relationship between corruption and transition processes – for example, in Spain after the dictatorship (Heywood 1997) or in Germany after reunification (Seibel 1997) – or between corruption and organized crime, as in Italy (Della Porta 1996).

Corruption has always been central to the political history of Japan, given that 9 of the 15 Prime Ministers between 1955 and 1993 were involved in corruption scandals (Nelken and Levi 1996: 2). Researchers have made great efforts to explain the spread of corruption in Japan, often citing cultural determinants to do so.

The analysis of corruption in the United States has often considered episodes of “grand” corruption during the prohibition era in the 1920s and political scandals in the 1970s and 1980s. More recently, corruption cases have been studied in the context of such 1990s and 2000s financial scandals as Enron, MCI-Worldcom, or the subprime crisis.

Corruption Across Sectors And Markets

Corruption has many facets. In the same country, it may be a major problem in one sector (e.g., public procurements) and a minor problem in another (e.g., public education). It would therefore be erroneous to consider it as uniformly distributed in a community. Composite indicators provide synthetic measures of corruption, but they do not help identify which sectors are severely affected and which are not.

In fact, the perception of corruption may vary radically within the same community. For example, a survey in Guatemala showed that the police were believed to be “honest” by only 10 % of the households in the sample, while universities were considered “honest” by 60 % of those households and the church by nearly 80 % (Recanatini 2011: 45). In the Western Balkans, the local government is regarded by the population as at most risk of corruption, while the military sector is not (UNODC 2011). Again, a survey conducted in several countries of Africa and Latin America showed that “petty” corruption was the main concern in some countries, such as Guinea and Sierra Leone, while nepotism and purchase of public positions were in others, such as Paraguay (Recanatini 2011).

On adopting a market perspective, it can be hypothesized that, as anticipated in section on “Understanding Corruption,” a higher risk of corruption exists in activities entailing a greater degree of intervention by the government or the regulator. Corrupt practices are widespread wherever licenses or authorizations are necessary to operate a business. This is particularly the case in the import–export sector or when foreign direct investments (FDI) are involved. Bribes of millions of USD have been paid by multinationals to local governments in order to obtain authorizations to invest (Tanzi 1998) and corruption scandals involving well-known companies, such as Siemens, have led to massive anti-corruption programs.

Public procurement is probably the area most exposed to corruption, both because of its high economic value (on average, around 10–20 % of GDP) and because of the crucial role played by public officials and local governments in that they often have a great deal of discretionary power (Ware et al. 2011). New regulations have been introduced in order to prevent corrupt practices, but there still persist gray zones where companies participating in public bidding processes can influence the competition or obtain secret information on rival tenders (Soreide 2005).

New businesses or markets are also susceptible to corruption. Recent studies have focused on green economy activities, which have recorded rapid growth in the past 10 years but also frequent cases of corrupt practices (e.g., in reducing emissions programs, forestry business, and wind power sector) (Caneppele et al. 2013).

Policing Corruption

To conclude, there follow considerations on how corruption could be combatted by policies and regulations. As shown above, corruption is a complex and multi-faceted phenomenon. Anticorruption policies therefore need to be tailored to the specific weaknesses of a region or a business area (UNODC 2011: 13).

In accordance with resource allocation models (see section on “Understanding Corruption”), many anti-corruption policies seek to reduce public intervention in the economy and to increase the degree of openness in the market as means to abate the incentives for corruption (RoseAckerman 2003). Deregulation programs have proved effective in reducing corruption in some countries: for instance, Singapore, where corruption in customs procedures decreased after dutyfree imports were extended (Bardhan 1997: 1335). Likewise, the introduction of competitive pressure among US police officials reduced corruption in the drug market (Bardhan 1997: 1337). In some cases, however, deregulation policies and competitive strategies may not be feasible or desirable solutions: for example, in the supply of essential goods or services in poor countries (Bardhan 1997: 1335).

As described in section on “Understanding Corruption,” low salaries in the public sector may encourage corruption. Reforms in the wage structure for civil servants or a premium system for virtuous officials are recognized as important strategies for fighting corruption effectively (Rose-Ackerman 2003; Bardhan 1997).

From an administrative point of view, the creation of independent bodies and anti-corruption agencies specifically aimed at preventing and/or prosecuting corruption is a pillar of many anticorruption programs. Among others, Hong Kong’s Independent Commission Against Corruption has been widely recognized as able to eradicate corrupt practices at the highest level of government. However, when replicated in other countries, the Hong Kong model has not produced the same positive results. In particular, it seems that anti-corruption agencies are less effective where corruption is more systemic (Rousso and Steves 2006: 247–248).

Enhancing public awareness of corruption and promoting a “culture of integrity” (i.e., through anti-corruption campaigns), in both the public and the private sectors, are other crucial measures. However, to obtain concrete results (i.e., the disclosure of corrupt practices by the employees of a company), it is necessary to put effective accountability mechanisms (e.g., whistleblower legislation and protection systems) in place (Rose-Ackerman 2003; Bardhan 1997).

Further tools for use in fighting corruption, such as the application of anti-money laundering regulation or the confiscation of assets resulting from corrupt practices, should also be considered.


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