Fighting corruption essential to sustainable development

Fighting corruption essential to sustainable development

During last week’s annual World Bank Group meetings, a few participants and other interested groups raised the need to address corruption in order to pursue development. New International Monetary Fund Managing Director Kristalina Georgieva spoke of the need for countries to pursue “structural reforms that can boost productivity and resilience,” including “modernizing legal frameworks to reduce red tape and fight corruption.”

Multiple experts have highlighted the role that corruption plays in undermining sustainable development, and the need to tackle the problem of corruption. Recently, an article by Delia Ferreira Rubio of Transparency International and Elisabeth Andvig of the World Economic Forum laid out the challenges that corruption poses to achieving the UN’s Sustainable Development Goals (SDGs).

At a time when accusations of corruption are rampant around the world, it is useful to pause to define the term. While there are various definitions, Transparency International defines corruption as “the abuse of entrusted power for private again.” This can occur in “grand” ways at a “high level of government” and in “petty” ways, with the “everyday abuse of entrusted power by low and mid-level public officials.” This article focuses on government corruption, though corruption can also occur in businesses and other areas of society.

Sustainable development is another term that requires definition. The UN defines it as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” While this can be interpreted in different ways, generally it refers to pursuing economic growth and improvement in human well-being in ways that also take into account the impacts on the environment, marginalized groups, and communities around the world. The UN has identified a set of 17 SDGs, with the objective of achieving them by 2030.

Corruption is a major impediment to sustainable development. While the UN notes that the judiciary and police are two of the institutions most often affected by corruption, it is a problem throughout many types of public institutions. While corruption is clearly more deeply embedded in some countries than in others, as Transparency International’s 2018 Corruption Perceptions Index highlights, it exists in all states. The UN estimates that the combination of “corruption, bribery, theft and tax evasion cost some $1.26 trillion for developing countries per year” — money that could be used toward sustainable development instead. Corruption fundamentally undermines trust in institutions and exacerbates inequality, and it threatens the success of all 17 of the SDGs.

Corruption fundamentally undermines trust in institutions and exacerbates inequality

Kerry Boyd Anderson

Improving health outcomes is one major area where corruption creates obstacles. Ferreira Rubio and Andvig note that, annually, “$7.35 trillion is spent on health care worldwide, but $455 billion is lost to fraud and corruption, leading to the deaths of more than 140,000 children.” Problems in this area include the need to pay bribes to receive health care and the selling on the black market of medicines intended for free or reduced-cost distribution.

Education is another sector in which corruption can have damaging, long-term effects on development and can exacerbate inequalities. Ranging from poor countries to middle-income countries such as China and wealthy countries such as the US, there are many cases of parents paying bribes to school officials, teachers and test administrators to ensure that their children attend elite schools. This is a practice that strongly feeds inequality by reducing options for talented children who lack the means to buy their way into a school. In many countries, “ghost teachers” who take salaries but do not teach deprive children of education.

Other problems in the education sector come from corruption in public sector contracts for building and running schools. For example, there were multiple cases of corrupt Afghan warlords and officials taking US aid money intended for schools for Afghan children. In addition to depriving children of the education necessary to develop a society and workforce, corruption can even threaten children’s basic safety, with allegations in countries such as China, Mexico and recently Kenya that corrupt building practices were responsible for the deaths of students when schools collapsed.

Corruption stymies private sector development. It creates extra costs for companies. It privileges companies that are connected to corrupt officials and willing and able to engage in corrupt practices, thus accruing benefits to themselves rather than to companies that might demonstrate better management, innovation, and overall competitiveness. Corruption can particularly inhibit growth among small and medium-sized enterprises that lack the means to engage in corruption in order to win contracts, gain permits and otherwise do business.

The natural environment also suffers from corruption. In many countries, environmental regulations are often not fully enforced, as violators pay bureaucrats to ignore their actions. This can have damaging, unhealthy effects on the environment and people.

There are solutions. Transparency International emphasizes the importance of strong, independent institutions, a free press that is able to report on corruption, and engaged citizens who can demand accountability. Beyond this, there is a wide variety of proposals. For example, coinciding with the World Bank Group meetings last week, Transparency International called for stronger transparency measures for the International Finance Corporation’s blended finance programs.

Specific solutions will vary by country and sector but, fundamentally, governments should implement accountability throughout all layers of the bureaucracy and judiciary. Businesses and governments should work together to ensure a level playing field. Combating corruption alone will not ensure the success of sustainable development, but sustainable development will fail without progress against corruption.

  • Kerry Boyd Anderson is a writer and political risk consultant with more than 14 years’ experience as a professional analyst of international security issues and Middle East political and business risk. Twitter: @KBAresearch
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