How can we address corruption in development?

EDITOR’S NOTE: “Representative estimates” can help aid agencies determine whether reports of corruption in certain development projects are just about “a few bad apples or the tip of the iceberg,” Center for Global Development senior fellow William Savedoff tells Lawrence MacDonald, vice president for communications and policy outreach, in this podcast.

Pogo famously said: “We have met the enemy and he is us.” That thought underpins my conversation with CGD senior fellow Bill Savedoff on corruption and development. Bill joined me last week after hosting a roundtable discussion with two anti-corruption experts who have recently published books on the issue, Frank Vogl, author of Waging War on Corruption and Laurence Cockcroft, author of Global Corruption Money, Power, and Ethics in the Modern World. In our conversation, Bill draws on the key ideas in these two books to unpack the various ways of thinking about—and addressing—corruption in development. We also discuss three emerging areas of CGD work on the issue, each of which focuses on the policies and practices of the rich and powerful—in global terms, us.

I start with a seemingly simple question: “How much money that should have gone to development is wasted each year by corruption?”

“This is often the first step in thinking about corruption,” he replies. “But we have no estimate telling us how much money is wasted. Some people would say that’s not even the right question. The question is whether the money that actually gets through has the desired impact.”

Still, there is no doubt that “corruption undermines institutions,” Bill tells me. “It corrupts the political process, and has implications for who holds the power, and for the institutions that make a country more effective in development and whether or not money is invested in things that help poor people.”

Perhaps the most heart-wrenching form of corruption is the petty corruption that happens every day in developing countries.

“This is a point that Vogl and Cockcroft emphasize a lot in their books,” he says. “Poor people are constantly having to pay police officers, women have to pay to see their children in the hospital, these stories are just horrific.”

While we generally think of corruption as a poor country problem, the rich world has a more sophisticated approach, in which some essentially corrupt actions are not even illegal. It’s the role of the rich world in corruption and development that interests us here at CGD. Bill and I discuss three emerging areas of CGD work.

Owen Barder, CGD director for Europe, is hoping to launch a substantial research effort to identify various types of illicit financial flows, estimate their size, and analyze their impact on development. This work is now in its early stages; the potential scope is outlined on the CGD in Europe page.

Senior fellow Charles Kenny argues that one simple remedy would be for all governments—in the developing and rich world—to publish nearly all contracts, and idea he is calling “Publish What You Buy” (see his paper and this recent Wonkcast).

In the final part of the interview, we discuss Bill’s proposal for aid agencies, such as the multilateral development banks and the Global Fund, to strengthen their efforts to fight corruption by preparing representative estimates, using a random sample of programs or projects. This contrasts with the current approach, in which internal auditors investigate only the activities that have sparked complaints. Unfortunately, this approach provides no information on the extent of the problem. Are the investigated activities a few bad apples or the tip of the iceberg? Representative estimates could give us an answer.

“I’m trying to get aid agencies to use social science techniques to determine a representative sample of their portfolio, Bill explains. “They would then do some good investigative work on projects to find out how much of the portfolio is unaccounted for. Smart investigations of a sample of projects should be able to get you a representative estimate of corruption in the portfolio.”

There are clear institutional advantages of having such information, not least in being able to refute critics who claim that investigated projects are typical rather than an anomaly. But there are risks, too. What if a representative sample inquiry finds that corruption really is wide spread?

I end the Wonkcast by trying to put myself in the shoes of the leader of a big aid agency. The time to call for a representative estimate, I suggest, is shortly after taking the helm, as Jim Yong Kim recently has at the World Bank. A new leader wins both ways. If results are good, celebrate! If not, blame the previous leadership and promise to clean house.

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Republished with permission from the Center for Global Development. Read the original article.