Corruption in a Globalized World

Corruption is as old as it is widespread. If there were any doubt, it was dispelled in 1997 when a team of Dutch archaeologists at an excavation site in Rakka, Syria discovered cuneiform inscriptions, an archive from the thirteenth century B.C., that included data about an Assyrian princess accepting bribes.

Although corruption is a long-standing phenomenon, modern governments and international institutions have been slow to take up the challenge of tackling the problem. The advent of democracy in the former communist countries, for example, was not accompanied by an adequate commitment to transparency in government. In emerging democracies, where people have grown up with corruption, what they observe as change under the new system is that the gallery of rogues casts a wider net and crime is rising in both its domestic and cross-border varieties.

Yet the news is not all bleak. Concern for improved standards of governance, transparency, and accountability is now spreading across the globe, in particular among aid agencies and international financial institutions. However, the scale of the impact of corruption is not yet fully acknowledged. Corruption not only distorts fair competition, it makes it impossible for millions of people, especially in developing countries, to earn an honest living. At its worst, corrupt political elites allocate scarce resources to huge arms deals, combining kickbacks for their cronies with an escalation of conflict, thus worsening the plight of populations in some of the world's poorest regions.

Free trade and privatization in a globalized world are neither the cause of corruption nor the remedy. The free market and the liberalization of international trade offer no counterpoint to favoritism, cronyism,and unaccountableoligarchies. The solution is a holistic approach: to foster, evaluate, and strengthen "National Integrity Systems" in line with local conditions. The success of anticorruption strategies hinges on the formation of a constructive partnership between governments, the private sector, and civil society.

Why Should We Worry About Corruption?

Corruption can be defined in a general way as the abuse of entrusted power for private benefit, and is as such conducive to severe political, economic, and social costs. Corruption usually has no straightforward victim. In the end, it is society as a whole that suffers, particularly its most vulnerable members.

First, we should be concerned because corruption represents a direct attack on democratic institutions. Indeed, it poses a growing threat not only to the democratic gains of the past decade, but also to long-established democracies. Political costs manifest themselves above all in the loss of legitimacy, and therefore of public support, for the regime in place. If the legitimacy of a political regime and its leaders depends upon the belief of its citizens in the capacity of those in power to defend and work for the public interest, and if this belief provides the basis for public endorsement of government policies, then corrupt behavior will lead to increased disillusionment with the leaders' authority. ¹ Ultimately, a regime that is characterized by corrupt actions will not provide a shining example for its citizens in their day-to-day activities.

The events in the Philippines earlier this year showed how corruption at the highest levels of government can undermine the legitimacy of democratic institutions. People took to the streets to call for the resignation of President Joseph Estrada after the Senate voted against accepting evidence that was expected to incriminate him on charges of corruption. Estrada, like Ferdinand Marcos before him, awarded preferential loans to cronies, extracted lucrative commissions on contracts, engaged in stock market speculation financed by state pension funds, and is estimated to have stolen $400 million during his presidency from mid-1998 to January 2001. That corruption had spread to the highest level of the executive branch was, in and of itself, a blow to the fledgling democracy. That the legislative branch failed to act against the president in light of mounting evidence against him further undermined the credibility of government institutions in the eyes of the electorate.

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