By Ian Ortega
First I will admit that I am one of the few who admires the Andrew Mwenda of today than the one of yesterday. I find the Mwenda of today more thoughtful than the one in the past. Probably because the young Mwenda was reckless, rash and foolish as expected of the young in their quest for knowledge. With experience, that Mwenda has evolved healthily into a tempered wise man, befitting of the title ‘old man of the clan.’
But let’s not get this argument lost in my wordy praise for a man that’s now scorned by many of his ‘former admirers.’
Twitter was recently awash with the corruption debate following Mwenda’s statements that corruption per se may not impede development.
Of course, these are statements you make and get clobbered because it questions and gives a new angle to the whole corruption debate. First the corruption debate in Uganda is rendered immobile because it always takes on the wheels of morality more than analysis based on historical studies.
The reasons that corruption should hurt development and growth are so persuasive that time and again, economists have been surprised not to find much support for that claim that majority agree upon.
In the recent studies carried out by Nauro F. Campos and Ralitza Dimova, professors of Development Economics, corruption was actually found not to have a real impact on growth. Of the 41 different cross country studies these two carried out in trying to establish if there was a genuine relationship between corruption and growth, they reported the following results: “32% of the 460 empirical estimates indicated a significant and negative impact of corruption on growth, 62% suggested a statistically insignificant relationship, while approximately 6% provided support for a positive and significant relation.”
But it is Prof. Jacob Svensson’s study that’s more interesting. From his broader evidence, he makes the same conclusion that there’s not much to show that corruption reduces growth on net.
Why might this be so? Professor Chris Blattman offers the following explanations:
“One reason: Most of us fail to imagine that corruption can also grease the wheels of prosperity. Yet in places where bureaucracies and organizations are inefficient (meaning entrepreneurs and big firms struggle to transport or export or comply with regulation), corruption could improve efficiency and growth. Bribes can act like a piece rate or price discrimination, and give faster or better service to the firms with highest opportunity cost of waiting.
In theory, this improves overall efficiency. If bribes subsidize large chunks of the government, then corruption reduces the need to collect taxes and allocate government spending efficiently–difficult and expensive tasks in poor countries. The “tax” that corruption imposes could be more efficient than the seemingly clean alternative. (To see more on this, besides the Svensson article, Pranab Bardhan has a nice review about that.)
Most of the economists I’ve read conclude that the gains from corruption are probably outweighed by the losses. But, looking at the numbers, it seems the losses don’t outweigh them by much (assuming either matter much at all).
A second reason corruption might not cause underdevelopment is that it’s a symptom of a deeper problem and not a cause of poverty itself. The lack of any real constraints on so many developing country Presidents could be responsible both for corruption plus all the other nasty things that impede growth. Attacking the corruption doesn’t change the fundamental problem. In fact, I think fighting corruption has become a distraction from the real issues.”
Thus, I want to join the Andrew Mwenda cult with both my legs and head and bet on the side that corruption could be efficient. I understand this will result in flashes of outrage as those lashed out at Mwenda. The rage is understood but it doesn’t make for sound policy.
As Prof. Svennson concludes in his study;
“China has been able to grow fast while being ranked among the most corrupt countries. Is corruption less harmful in China? Or would China have grown even faster if corruption was lower? These types of questions have received some attention, but more work along what context and type of corruption matters is likely to be fruitful.”
In the end, we would have a better debate on corruption in Uganda if we detached our moral imperatives, emotions and sensations and allowed reason to take the front seat. If that doesn’t happen, we may fail to listen to what corruption is not saying. On this one thing I am certain, our failure to develop as a country is not reducible to the 1.6% we lose to corruption every year.
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