Current controversies: Corruption and Development

Question 1

What is the conventional wisdom? (Kelsall)

Answer 1

that for Africa to develop needs free market and good governance, this implies reducing state interventions in markets and strengthing government accountability by means of civil service reform, civil society strengthening and multi-party democracy

Question 2

What has growth largely been driven by in Africa?(Kelsall)

Answer 2

-an upsurge in external demand for primary commodities and by investments in extractive industries, only minor progress in agriculture and manufacturing

Question 3

Why does Mustaq Khan criticise conventional wisdom? (Kelsall)

Answer 3

-its excessive focus on the damaging effects of clientelism and rent-seeking, clientalism is an inevitable feature of developing economies and rent-seeking exists where there are imperfect markets. What matters is whether these phenomena are geared to the creation and capture of productive or unproductive rents

Question 4

Why has Dani Rodrik critiqued the conventional hands off approach? (Kelsall)

Answer 4

-the most active developers have taken a much more active approach to stimulating investment than the conventional wisdom recommends

Question 5

Why is good governance not crucial to transformative pro-poor growth? (Kelsall)

Answer 5

two neo-patrimonial regimes (Kenya 1965-1975, Ivory Coast 1960-19750 in which growth was rapid, the structure of the economy was transformed and there were significant reductions in poverty

Question 6

What distinguished successful neo-patrimonial regimes from less successful ones?

Answer 6

• The presence of a structure of mechanism for centralising economic rents and managing them with a view to growth over the long term.
• Policy orientation also important, more successful regimes tended to employ pro-rural, pro-market policies. For example in Kenyatta’s Kenya and Nyerere’s Tanzania, rent management was centralised and geared to the long term, but in the former economic policy encouraged agricultural investment by small farmers and private businessmen alike, while in the latter it discouraged it, with calamitous results

Question 7

What does Nigeria exemplify? (McFerson)

Answer 7

even active pluralism and participation can coexist with substantial political and civil restrictions

Question 8

Angola: Moving glacially in the right direction (McFerson)

Answer 8

• 37th out of 46 African countries for quality of economic regulation
• gatekeepers control access to president, who typically favours vertical relationships fostering dependence on him
• recent improvements with the weakening of the UNITA movement, less restriction on free political activity
• 2008 election had some issues with due process

Question 9

congo Brazzaville: deja vu all over again (McFerson)

Answer 9

• regarded as one of Africa’s most corrupt
• oil revenue is cash cow for president , his family and cronies. Estimated one third of Congo’s $1 billion in oil revenue does not show up in the country’s budget
• 2006, presedent’s son, spent $35,000 of his country’s money on designer items
• 2007 president took a 50 person entourage on an 8 day visit to New York to deliver a 15 min speech to UN. Stayed in crowne plaza hotel, where bill was almost $500,000, presidential assistant paid in cash at check out

Question 10

Botswana: the exception that proves the rule and points the way (McFerson)

Answer 10

-Botswana has been consistently ranked as ‘free’ has the second highest possible rating in terms of political rights and civil
liberties, very low corruption

-poster at Gaborone airport reads ‘Botswana has ZERO tolerance for corruption”, it is illegal to ask for or offer a bribe

Question 11

What do Acemoglu, Johnson and Robinson attribute to Botswana’s political legitimacy, good public sector manegement and protection of property rights? and which factor which McFerson add? (McFerson)

Answer 11

• Inheritance of pre-colonial political institutions
• limited British colonialism
• strong and accountable political leadership since independence
• the political elite’s motivation to reinforce institutions
• McFerson would add, the mono-ethnic/mono-cultural nature of Botswana society, in share contrast to the ethnic pluralism and internal tensions charactersitic of most African states as a result of the artificial colonial boundaires

Question 12

How does Mushtaq Khan exemplify varying growth amongst countries with corruption? (Khan)

Answer 12

• South Korea widespread corruption has accompanied decades of very high growth
• areas of the Indian subcontinent, corruption has been associated with low growth
• countries in South East Asia, high levels of corruption associated with moderately high long-run growth rates

Question 13

How is corruption usually defined? (Khan)

Answer 13

-the violation of the formal rules governing the allocation of public resources by officials in response to offers of financial gain or political support

Question 14

How can corruption be avoided? (Khan)

Answer 14

-the allocation and creation of new right, have to follow strict rules so that particular individuals could not change these allocations by bribing

Question 15

What two components can the effects of corruption be broken down into? (Khan)

Answer 15

.the economic effect of the bribe- the resources transferred In the bribe often result in a reduction in social value and is therefore an economic cost for society, usually bribes from industrialists represent a social cost of variable extent as social wealth is reduced to a greater or lesser extent. This is usually the case if the bribe-giver would otherwise have invested the bribe in production

.the economic consequence of the new rights of reallocations brought about by state officials as the quid pro quo of bribes they have received. The types of rights created, whom they are created for and the terms under which they are created