Prosperity Versus Planning: How Government Stifles Economic Growth

By David Osterfeld | Go to book overview

9
Corruption

Revelations about Somoza in Nicaragua, Duvalier in Haiti, and especially Marcos in the Philippines have generated numerous commentaries about corruption in the Third World. These commentaries have generally been long on righteous indignation but short on detached analysis. Corruption clearly has a pejorative connotation. As David Bayley has noted ( 1966, p. 719), most observers "uncritically assume that the presence of corruption is an important hindrance to economic growth and progressive social change."

Where this assumption is not made, where it is recognized that corruption may at times have beneficial consequences, usually what follows is little more than a laundry list of activities showing those having beneficial and those having detrimental results. Seldom is any attempt made to ascertain why certain corrupt acts may have beneficial consequences, while others are clearly harmful. For instance, Marcos's massive embezzlement of funds from the Philippine state treasury is a case of corruption that clearly hurt society. However, a Peruvian street vendor's bribing of a low-level government official to obtain a license to sell his wares makes a positive contribution to society.

A set of general principles can be established to decide what separates corrupt but beneficial activities from those that are corrupt and perverse. In this way the Marcoses, Duvaliers, and Noriegas of this world can be distinguished from the humble street vendors both in the effect of their corruption on the economy and society as a whole, and in the morality of their actions. This chapter shows that certain kinds of so-called corruption are a direct response to government intervention that restricts freedom and socially beneficial exchange. And, because these actions effectively offset government encroachment on freedom, they move the economy closer to a free market and therefore have a positive effect on economic growth and development.


Corruption Defined

Numerous attempts have been made to define corruption. None has met with general acceptance. Perhaps a fruitful approach would be to begin with what political corruption is not. Generally speaking, a "good citizen" is one who obeys the laws

-204-

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Prosperity Versus Planning: How Government Stifles Economic Growth
Table of contents

Table of contents

  • Title Page iii
  • Preface vii
  • Contents xi
  • I - Theoretical Framework 1
  • 1 - The Three Worlds 3
  • 2 - Economy, Government, and Culture 19
  • II - The Key Variables 59
  • 3 - Food 61
  • 4 - Resources 84
  • Notes 102
  • 5 - Population 104
  • III - Economic Development: Engines and Obstacles 137
  • 6 - Foreign Aid 139
  • 7 - Multinationals 162
  • 8 - Migration 194
  • 9 - Corruption 204
  • Note 218
  • IV - Conclusion: The Enabling Environment 219
  • 10 - Property, Law, and Development 221
  • Notes 245
  • References 247
  • Index 265
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