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UN International Anti-Corruption Day - An Expert Perspective

UN International Anti-Corruption Day - An Expert Perspective

Corruption is a social and economic scourge that imposes significant economic and social costs on people in every corner of the world. Today, the UN acknowledges this drag on global prosperity by marking International Anti-Corruption Day.

The UN estimates that more than $1 trillion – that is trillion with a T – changes hands in the form of bribes each year, with a further $2.5 trillion stolen through embezzlement and other forms of corruption. To put these large and ungainly numbers in perspective, the World Bank puts the GDP of the entire European Union at around $17 trillion in 2017.  Another way to think about the scale of the problem is to note that 6 billion people live in countries that Transparency International classify as “corrupt.”

We are fortunate to live in a country that, according to the available evidence, is relatively clean. Transparency International ranks Ireland as the 19th cleanest country in the world and the World Bank puts us in the top 10 percent.  However, it would be foolish to interpret this as evidence that Ireland is corruption-free. We are all aware of the high-profile and well-documented cases of corruption in Ireland.  No country is, will be, or ever has been, completely free of corruption. Even in Sweden, ranked 6th by Transparency International, around 2 percent of firms admit to having been solicited for bribes.

Complacency about corruption is not only foolish, but also dangerous. Putting aside the damage that corruption does to health outcomes and general well-being – not to mention its role in generating inequality – there are cold hard economic reasons to curb corruption that people of any political persuasion can get behind.

Countries and firms exposed to corruption grow more slowly. Corruption puts a thumb on the scales and creates an imbalance in economic costs and benefits. Simply put, activities and opportunities that would otherwise have been profitable are not pursued in the face of a risk of bribery, embezzlement, or outright expropriation. Another way in which corruption undermines economic prosperity and progress is through the generation of red tape. Evidence tells us that corrupt bureaucrats dream up unnecessary paperwork to extract bribes and gifts from entrepreneurs.

Given Ireland’s economic model and the strong link between foreign direct investment and corruption, Irish officials must be very careful to avoid behaviour that could be interpreted as corrupt. Multinationals also consider the likely costs of poor governance and require quality infrastructure to do business. Numerous studies tell us that multinationals do not like to operate in corrupt environments. The more corrupt a country is perceived to be, the less foreign direct investment it receives.

Another reason to confront corruption is that it undermines political trust and engagement. All countries face challenges that require collaboration and engagement with the state. Sadly, we know that people who have experienced corruption, or perceive that corruption is an issue in their country, are less likely to say that they trust their state or its agents. Victims of corruption are also less likely to trust other citizens, further damaging the smooth functioning of the economy.

Worryingly, Eurobarometer data for Ireland suggests that 68 percent of us believe that corruption is widespread. Again, Ireland is not corruption-free, but what data we have does not support the notion that we are a very corrupt country. One consequence of this misperception could be that it is more difficult for people and politicians to work together to solve the very serious issues facing our society.

Given the times we live in, it is important to note that a free press is a very effective deterrent to corruption. The press has an economic incentive to expose corruption, which can be lacking in a country’s law enforcement agencies. Several studies have documented that countries with a freer press are perceived to be less corrupt, but it goes beyond mere perceptions. For example, a classic paper finds that suspicious outcomes in sumo wrestling were much less likely while the Japanese and global media held the sport in their gaze following scandals.

A recent study carried out with colleagues at Dublin City University has found that press freedom makes it more difficult for bribery to take place in relation to tax and construction. An appreciation of the media’s role in the fight against corruption can help us to understand why certain politicians may seek to curtail the freedom of the press. Given the awful consequences of corruption, we must not allow them to succeed.

So what can we do to fight corruption? The UN sees roles for governments, industry, trade unions, the media, and NGOs. However, there is also a role for citizens. We must be informed and willing both to speak up and to hold our elected and appointed officials to account. We are fortunate to live in one of the relatively few “clean” countries. Social science, and history, tell us that it is easier for a country to move towards corruption than away from it, so we owe it to ourselves and to our children to make every day anti-corruption day.

Dr. Robert Gillanders is an economist and corruption expert from Dublin City University’s Business School.