Combating Corruption: Look Before You Leap

By Shah and Schacter 

16 January 2006—In light of the global movement aimed at combating corruption, what accounts for slow progress is the one-formula approach others believe will apply to all cases. Combating Corruption: Look Before You Leap by Anwar Shah and Mark Schacter (IMF, 2004) discusses how getting the bigger picture on a country translates to the success of anti-corruption programs.

The article drives at the need to identify which types of corruption are rampant and the country-specific causes that foster bad governance.  Shah and Schacter identified three broad forms of corruption.  Petty administrative or bureaucratic corruption is the most basic type, when officials use their office to bribe, demand kickbacks and divert public funds. On a larger scale, the theft or misuse of vast amounts by state officials and their close associates and allies constitute grand corruption.  The third type, is known as state capture or influence peddling.  This is when collusion between private sector and public officials occur for their mutual private benefit.  Effectively, private sector “captures” the state by using the legislative, executive and judicial branches to advance its interests.   

Given the three broad forms of corruption, these types still vary according to country. Before programs are set in place to curb corruption, it is necessary to know the local factors that make a country vulnerable to corruption.  Key corruption drivers were identified from in-depth country studies on six developing countries. Countries covered by the study are Guatemala, Kenya, Latvia, Pakistan, the Philippines and Tanzania.  The following are the findings: 

• When the legitimacy of the state as the guardian of the public interest is in question, this creates conditions ripe for corruption.  This becomes rampant when clientelism shapes the political landscape and the line between what is public and private is blurred. 

• Corruption is also rampant where the rule of law is weekly embedded.  Laws and rules apply to some, while others are exempt.  A common manifestation of uneven application of the rule of law is when law enforcers become the first to break laws or once the judiciary ceases to be independent.

• Institutions of accountability are ineffective in countries where corruption is high.  In places where corruption is low, monitoring mechanisms were found to be strong.

• The commitment of national leaders to combating corruption is weak.    In societies where public sector corruption is endemic, it is safe to assume it is entrenched in the upper layers. In which case, higher public officials are less likely to initiate anti-corruption programs. 

Shar and Schacter also devised a model that puts developing countries under three broad categories.  This model reveals corruption as a fundamental governance failure. When the incidence of corruption is high for a country, quality of governance is poor, therefore anti-corruption efforts must be aimed at promoting good governance and getting fundamentals right. 

It is well known that multilateral institutions are less likely to fund anti-corruption programs in countries where governance is weak. The article ends with suggested “entry points” to address governance-based drivers of corruption.  Developing countries can begin with these key efforts: service delivery performance, citizen empowerment, information dissemination, economic policy reform and involvement of other stakeholders, on which to ground a solid anti-corruption strategy. 

To read the full article, visit http://www.imf.org/external/pubs/ft/fandd/2004/12/pdf/shah.pdf.

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