Peculiar Dynamics Of Corruption: Religion, Gender, Eu Membership, And Others

Religion, Gender, EU Membership, and Others

Omer Gokcekus

• Publisher: WSPC
• Year: 2014
• eBook ISBN: 9789814556996
• Topic: Biological Sciences
• Subtopic: Science General
• Index: Biological Sciences

Drawing from theories in economics, sociology, and psychology, Peculiar Dynamics of Corruption examines how gender, religion, culture, and history affect corruption. It asks and answers many questions such as, does employing more women than men reduce corruption in public sector organizations? How does a country's religious landscape a hundred years ago affect corruption today? Is corruption higher in recessions or times of economic growth? The answers to these questions are surprising: group dynamics may matter more than gender, a history of Protestantism has lasting effects on a country, and corruption is cyclical, but not in a way, most would assume. Corruption is not motivated purely by financial gain and by offering simple explanations of these unexpected causes. This book broadens our understanding of this global issue.

Contents:

• Peculiar Dynamics of Corruption
• An Elusive Task: Quantifying Corruption
• Explaining (Somewhat) the Religion–Corruption Connection
• Gender or Group Dynamics?
• The Level and the Quality of Openness
• EU Membership and Corruption
• Business Cycles and Concluding Thoughts

Readership: Graduate students and researchers in the fields of political science and political economics.
Key Features:

• Broadens our understanding of corruption and its courses
• Examines how gender, religion, culture, and history affect corruption

Chapter 1

Peculiar Dynamics of Corruption

“The fish stinks first at the head.”

The above saying is a Turkish proverb that accentuates the origin of corrupt behavior.¹ In essence, if a government or institution is corrupt, it is the leaders of these organizations that are the cause. The heads of state and other leading authorities maintain corruption. Yet, while corrupt leaders can establish an atmosphere in which corruption is an accepted norm, this does not mean that all leaders condone corruption.

In a wide spectrum, from the Pope at the Vatican — the highest authority for the Catholics — to the head of the ruling Communist Party of China in Beijing, authorities across the globe recognize corruption as perilous to the well-being of their communities. Several international institutions, non-governmental organizations, and even government offices have made eradicating corruption their top priority. Yet, it appears that all their efforts may have been in vain. The indicators that track the level of corruption all draw the same dismal picture: The world is becoming a more corrupt place!

If corruption is increasing despite growing attention and condemnation, should we even care? Is corruption actually a problem worth combatting in a world filled with problems? Simply put, yes. Corruption has a widespread negative impact that reverberates throughout society. Corruption is not an economic good; it is an economic bad for two fundamental reasons — it diminishes efficiency and creates equity problems.² Therefore, when it comes to corruption, less is definitely more.

Corruption distorts relative prices, which in turn leads to efficiency losses due to the misallocation of resources.³ Moreover, study after study has shown that corruption disproportionately hurts the poor and people otherwise economically disadvantaged in a country. Corruption adds insult to injury, coupling inefficiency losses with increasing inequality and equity problems.

This is immediately apparent when looking at the education system of corrupt countries. These countries make formal education available not according to merit and need, but according to political patronage or other dishonest criteria. This severely limits the potential social returns of educational investment. These corrupt educational systems not only produce incompetent professionals — such as doctors, engineers, scientists, and politicians who are unable to perform effectively at their jobs — but, perhaps more importantly, also future generations that, from a very young age, believe that corruption is a socially acceptable behavior.⁴

A country’s health sector is also denigrated by corruption.⁵ Several types of corrupt activities flourish in the health sector: Embezzlement and theft, corruption in procurement, corruption in payment systems, corruption in the pharmaceutical supply chain, and corruption at the point of health and service delivery. There are striking examples of the harm caused by the waste of resources in providing health services from all over the world. For instance, in the United States, the two biggest healthcare providers, Medicare and Medicaid lost 5-10 percent of their budget to “overpayment.”⁶ In fact, in the United States, Medicare alone has overpaid private insurers by 282.6 billion dollars between 1985 and 2012, or around 10 billion dollars per year.⁷ To put that in perspective, Nicaragua’s GDP was 10.5 billion dollars in 2012.⁸ But it is not just the United States that is losing money in its health sector. For instance, in Cambodia, more than five percent of the health budget is lost to corruption even before it leaves the central government. It is not just money that is lost to corruption. In Africa, counterfeit medication has been linked to 100,000 deaths a year.⁹ In the Philippines, poor and middle income families who are unable to afford small bribes have to wait longer for health services and are frequently denied vaccines.¹⁰

Corruption in education and health disproportionately affects the poor and other disadvantaged groups by preventing them from getting the proper education and health services they need and deserve. In return, this denial of service restricts their ability to improve their human capital and their chances to advance in life. These groups cannot afford to make that “extra payment” to receive the “free service.” Furthermore, because they are not in a position to reciprocate a “favor” with a favor of influence to the bribe seeker, they are often asked to pay bigger bribes (both relative to their income and in nominal terms) than other groups.

If the costs of corruption are so high, then what is the magnitude of the relationship and benefits between good governance and sustainable development indicators? According to recent studies, the negative relationship between the level of corruption and development is so strong that it often distorts the usual relationship of increased wealth leading to improved development. For example, bribery offsets more than half of the positive effect that increased wealth has on a country’s ability to educate its children. This distortion is so great that even if two countries enjoy the same economic growth, the one with the higher level of bribery and corruption will end up improving the level of education among young people at a lower rate.

In the case of maternal health, the correlation between bribery and maternal mortality suggests that lowering bribery correlates with nearly a two-thirds reduction in maternal mortality. This is a greater reduction than the one that occurs between increased national wealth and lower maternal mortality rates. As is reported in Transparency International’s Global Corruption Barometer 2013, in the countries where the percentage of the population who paid a bribe in the past year was 60 percent or more, the average maternal mortality rate per 100,000 live births was 482. This is 8–9 times higher than in countries where less than 30 percent of the population paid a bribe. Similarly, in the countries where 60 percent of the population had paid a bribe, the illiteracy rate among 15–24 years old was 11 percent, 3–4 times higher than the illiteracy rate of 3 percent in countries where less than 30 percent of the population paid a bribe. Clearly, corruption hurts the young and vulnerable much more than other groups.

For all that we have learned about corruption, researchers still have substantial knowledge gaps and have overlooked some crucial dynamics. Namely, researchers have not been able to quantify corruption and although numerous, corrupt activities are typically unrecorded. There are, however, certain ways to discern the cost of reducing corruption that have been mostly overlooked by researchers. In particular, two ways seem promising.

First, even though corrupt activities cannot be directly observed or properly recorded by officials or researchers, we can make the assumption that people who receive bribes eventually spend that money. After all, keeping that money locked away in the bank or under the mattress would not improve someone’s utility or happiness. If we know that corrupt officials are spending their bribe money, we might be able to track their buying habits to see how widespread corruption is in a country. Corrupt officials might have a tendency to buy luxury goods and services, such as luxury cars, that they would not be able to afford if they were honest. Owning a luxury car could then also be a signal to other corrupt officials or potential clients. Tracking the sale of luxury cars would then be an indirect way to quantify the amount of corruption that occurs in a country.

Second, there may be direct ways to quantify corruption. Previous researchers who have attempted a direct quantification have used audits of various projects and officials in a country. Unfortunately, these are expensive, time-consuming, and infeasible to implement on a country-wide level. Nevertheless, there is an alternative statistical method for directly measuring the amount of corruption in a country. This method uses a well-established theory (the human capital theory) and information on public officials’ salaries and demographics to determine how much income these officials receive through bribes. This bribe income can be extrapolated to see the cost to the overall economy in a country. (Chapter 2: An Elusive Task: Quantifying Corruption)

When it comes to condemning corruption though, most individuals have no problem being direct with their thoughts. In a speech broadcasted on the Vatican Radio station on November 11, 2013, the newly elected Pope Francis demonstrated his disgust with corruption when he said: “A Christian who is a benefactor, who gives to the Church with one hand, but steals with the other hand from the country, from the poor, is unjust. And Jesus says: ‘It would be better for him if a millstone were put around his neck and he be thrown into the sea.’”¹¹ This is a rather strong statement coming from a loving and caring newly elected Pope. Clearly, he is showing no mercy toward the corrupt. Statements like these could lead one to believe that religious leaders and religions in general chastise corrupt individuals and promote the reduction of corruption.

In empirical corruption literature, the level of perceived corruption in a country and its citizens’ religious affiliation are significantly related to each other, but not in a way one would typically expect. Despite Pope Francis’ statement, countries with a large current Protestant population are less corrupt; countries with a large Catholic or Muslim population are more corrupt.

This relationship has led researchers to explore exactly what about Protestantism encourages less corruption. This research is part of a larger debate over the effects of Protestantism in society. However, these scholars have overlooked a potentially vital piece of the puzzle; the role of institutions in a society. Institutions range from cultural to governmental institutions and have far reaching and long lasting effects on a society. This is especially so when it comes to cultural institutions, as their effects are felt even after the demographics of a society change.

Yet, most researchers approach Protestantism by looking at the current percentage of Protestants in a country. This misses the fact that religion is part of a country’s culture and has a long lasting impact on a society and its institutions. This long lasting impact may matter more than current percentages; especially since a country’s religious composition can change dramatically in a short period of time. If the impact stemmed from current percentages, then Protestantism’s influence would flux with the changes in religious composition in a country. (Chapter 3: Explaining (Somewhat) the Religion-Corruption Connection)

In an instance of strange bedfellows, just four days after Pope Francis’ speech, Reuters reported that Beijing had stepped up its anti-corruption efforts. These new efforts were driven by the country’s leadership; it was reported that “the Chinese President Xi Jinping has said that endemic corruption threatens the party’s very survival and has vowed to go after high-flying ‘tigers’ as well as lowly ‘flies’ — though so far most anti-corruption targets have been low-ranking.”¹²

The calls against corruption by Pope Francis and President Xi were not isolated events. Breaking with tradition, the World Bank President Jim Yong Kim also took a tough stance on fighting corruption. In a December 19, 2013 speech, he called corruption “public enemy number 1.”¹³ Throughout its history, the World Bank has traditionally shied away from directly combatting corruption due to political sensitivities. In his speech, however, President Kim not only named corruption public enemy number 1, but also announced the World Bank’s plan to hire more experts in the rule of law and other governance issues.

These new hires and other practitioners of good governance would be wise to follow some common anti-corruption practices identified by researchers. These practices aim to reduce, if not eradicate, corruption by providing incentives to public officials to renege on corrupt activities by either increasing punishment — or the potential losses incurred if they get caught — or by increasing the probability of getting caught. The logic of these practices is straightforward: making it more likely for someone to get caught and increasing the punishment for corruption will cause individuals to decide that corruption is not worth the risk.

Even if these reforms are not implemented, there is a belief among researchers and practitioners that women are less corrupt than men. In fact, there are a number of studies indicating that the higher the number of women parliamentarians, the lower the level of perceived corruption in a country.¹⁴ However, this research is preliminary and how gender is linked to corruption is still not well-understood. While increasing the number of women employed in public agencies lowers corruption initially, there might be a limit. Once this limit is passed, if the common incentives described above are not implemented, the perceived level of corruption will begin to rise again. This may occur once the changing gender composition no longer severely affects the group dynamics in an organization, as group dynamics would then revert back to the corrupt nature fostered by the overall environment. (Chapter 4: Gender or Group Dynamics?)

Similar to the idea that having more women in public offices automatically reduces the level of corruption, there is some research that shows that higher trade intensity will also automatically reduce corruption. Specifically, researchers have demonstrated that the higher the level of economic openness in a country, the lower its level of corruption. Essentially, countries that trade more relative to their Gross Domestic Product (GDP) experience lower levels of corruption. Be that as it may, this understanding has ignored both the quality of openness — the possibility of a country being influenced by their trading partners’ corrupt behavior — and whether the trade relationship is symmetric or asymmetric, as an asymmetric trade relationship allows one country to impose conditionality on the other. (Chapter 5: Level and Quality of Openness)

Related to the idea of conditionality in a trade relationship is the idea of the socialization process countries must undergo when joining international organizations. When a country joins an international organization, such as the European Union (EU), there is an expectation that once a candidate country goes through the accession talks, harmonizes its laws and regulations, improves its standards to EU levels and then becomes a member of the EU, its level of corruption will automatically be reduced to the level of the incumbent EU members. Nonetheless, this assumption ignores the possibility that influence can extend two ways; corrupt countries could also influence the less corrupt incumbent states. Additionally, this thinking puts too much faith in the socialization process without adequate evaluation. It may be that joining the EU does not reduce corruption and by adding more members the EU may have inadvertently made itself more corrupt. (Chapter 6: EU Membership and Corruption)

Going forward, all these different factors may appear to be separate from each other, but there is a common theme: They are all peculiar dynamics of corruption that have been overlooked. Understanding these dynamics will allow policymakers, researchers, and advocates of good governance to more comprehensibly ...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Dedication Page
• Table of Contents
• Preface
• Chapter 1 Peculiar Dynamics of Corruption
• Chapter 2 An Elusive Task: Quantifying Corruption
• Chapter 3 Explaining (Somewhat) the Religion-Corruption Connection
• Chapter 4 Gender or Group Dynamics?
• Chapter 5 The Level and the Quality of Openness
• Chapter 6 EU Membership and Corruption
• Chapter 7 Business Cycles and Concluding Thoughts
• Notes
• Bibliography
• Index