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Experts say Corruption Hinders Global Economic Development

  • Bill Rodgers

Bribery, nepotism and other forms of corruption exist to a greater or lesser extent in all countries. But their corrosive effects hurt poor nations the most. The World Bank considers corruption one of the greatest obstacles to economic and social development.

The Bank says corruption undermines the rule of law and weakens the institutional foundations upon which economic growth depends.

Peru's one-time intelligence chief, Vladimiro Montesinos, paying a bribe to a congressman. The video, secretly taped by Montesinos himself, was leaked to the media in September of 2000. The resulting scandal brought down his boss, President
Alberto Fujimori - ending 10 years of autocratic rule.

The Montesinos bribery scandal and the fate of the Fujimori government are textbook examples of the corrosive effects of corruption.

"Corruption is something that afflicts all of us. There is no country that does not have a challenge in terms of controlling corruption."

Nancy Boswell heads the U.S. chapter of Transparency International -- a group that monitors global corruption. "There are always going to be people who are corrupt. I don't think at the end of the day that any one of us believes that one country has more of that culture or less of that culture. It really is a question of have they been able to develop the institutional mechanisms to control it."

Corruption takes many forms - from bribery of police or government officials, to insider trading in stock markets, to nepotism in hiring for jobs - both in the public and private sectors. Some experts estimate that more than one-trillion dollars in bribes are paid each year- a practice that has an especially negative impact on the poor. Corruption expert Louise Shelley.

"If you have five percent of an economy being paid in bribes or seven percent, a strong economy like an Italy can tolerate that. A weaker economy that loses a similar percentage of its assets will be much worse off."

Oil-rich countries such as Venezuela and Nigeria are especially susceptible to corruption. Shelley says most nations that depend on a single natural resource for their income have similar problems.

"Because you have one natural resource that generates huge amounts of money and that natural resource is concentrated in the hands of a central elite or ruling figure and therefore it becomes a very close held group that controls this natural resource. And because there is such an international market for it, there's just enormous corruption that accompanies it."

The United States is not immune from corruption. Congressman Randy "Duke" Cunningham was forced to resign his office last year and was sentenced to jail for taking more than two million dollars in bribes.

But experts say it is in dictatorships, such as those in Belarus and Burma, where corruption flourishes. There is no transparency, no free press, and citizens have almost no rights. Louise Shelley points to the 2003 Rose Revolution in Georgia as an example of citizens mobilizing to depose a corrupt, authoritarian government.

"You need citizens that are so fed up with the corruption that is in existence that they demand change. And that they are ready to change their ways and their behavior so they are not complicit in this corruption."

Anti-corruption marches have been staged in Peru and other nations where citizens are demanding change. Mexico and several other countries have signed a United Nations convention outlining how government, the private sector and citizens can stop corruption. Business has a special role to play, says Transparency International's Nancy Boswell.

"Every time we see the damage, particularly in the poorest areas of the world, and we understand the disproportionate impact of corruption on the poor, then I think we remember this is really important for all of us to play a role. Business, for example, thinks about 'Am a going to get the deal?' And they think about competition. It is important that they also understand there's an impact to their actions that flows down the chain to the very poorest."

The stakes are highest for developing countries. Transparency and other groups say these nations must stamp out corruption if they hope to emerge from the mire of underdevelopment and poverty.

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