There is no scientific proof that corruption is an impediment to economic development except for moral concerns. Take the case of Uganda. In 2012, World Bank reported that Uganda loses Shs.500 billion in corruption deals every year. The story of 500 billion being lost sounds outrageous but it doesn’t tell the whole story. And it’s what the Shs.500 billion doesn’t say than what it says that matters.
A study of economic history shows how hard it is to arrive to a conclusion that corruption per se undermines growth. There could be one or two papers with evidence that corruption affects growth negatively, but those papers too, don’t tell the whole story, and there are lots of other papers to contradict this, papers that show the productivity of corruption.
Most of what we call corruption today was actually codified so after western nations had developed. What we call “good governance” today is actually the end product of the development process, not a cause of it. Development is not a morality contest. America enslaved blacks and killed all Native Americans to be where it is. UK colonized others, forced the Chinese to buy its opium and massacred many to get where it is. And if you read about many rich industrial tycoons you find their path littered with blood and robbery. I don’t cite these examples to justify corruption but to stress the point: the existence of corruption per se does not mean a country cannot develop.
Academic literature shows corruption as being either harmful or facilitative to growth. It may be neutral. The existence of corruption in Uganda does not mean our country cannot transform. I am not sure if Uganda can survive as one nation without corruption. It may be the glue holding the nation together. Wonder what holds our multi ethnic elites together in an entity called Uganda? Public service? Me thinks corruption!
With a budget of 24 trillion, I think stealing 500 billion is peanuts (it’s a theft rate of less than 2%). In the wider scheme of things, a 2% theft rate is really small. It means that you are utilizing 98% of the money correctly. May be we don’t lose the 500Bn. May be the thieves invest it in more productive ventures than government would have. Or maybe the stolen 500Bn is what ensures a stable political order without which we would have civil war. It’s all hard to tell. One would have to be at least 100 years into the future to tell. Even if one was right about the loss of 500Bn, one doesn’t know the other opportunity cost of not stealing it.
On all companies, the government’s theft rate is 30% in profit tax. That has not killed investment in Uganda. Even the Vatican and Muslim Caliphate didn’t grow rich by preaching the word of God only.
Stealing added something too. Again this is not to make an attack on either. For everyone in this debate on corruption: let us analyze and not moralize. If I am called to moralize, I will say the opposite about corruption. I understand that by analyzing with cold logic divorced from morality, I am making many people cringe. But it’s true. When you shade off moralism, you see the world in a different light… “We hold these beliefs to be true” is a myth.
The most developed countries did not do so through moral means. In spite of the West growing rich through genocide, enslavement, colonial oppression, we admire and worship them. Why? One needs to read about the corruption and brigandage that led to the growth of the Korean cheobals. You’ll cringe.
My job is to hold a mirror to Ugandans and they look at themselves. If they don’t like how they look, what can I do? As a moral imperative, I think we need to fight corruption ruthlessly. But as a solution to development, we would be lying. From a moral perspective, I agree with that much could be done with the money that’s stolen. I get extremely angry to see thieves walking away unpunished. I’ve been planning to go to the bush and fight corruption that causes the death of millions in our health system.
But from a development perspective, all the hue and cry against corruption is much ado over so little. I would say most countries developed in spite of rampant corruption. Historically what we consider corruption today was codified so less than 80 years ago.
They had been normal practices. History shows you that practices we call corruption today were legal and normal before these countries developed. A quick history of Western Europe and North America and the beginning of categorizing certain acts as corrupt will reveal all this to those interested. It is development that made those acts corrupt. But after they had been present when these nations were poor. What is codified as corruption today became so after Western countries had developed – historical fact.
Again, let no one guilt trip me here. I am not promoting corruption but making an analytical observation. To argue that Belgium grew rich by looting Congo is to state a historical fact but not to endorse it. Leopoldo claimed his Congo adventure was for philanthropic reasons and then proceeded to kill, maim and lie about it. Codification of corruption is a consequence of development not a cause of it. History is so clear on this.
Whereas corruption inflates costs, if the stolen money is invested well, it may help drive dynamism in other sectors. Corruption is the grease M7 has used to lubricate his power because it is the glue that brings Ugandan elites together. Let us assume a corruption-free Uganda, who would dash for public office? Who would love Uganda? Even God wouldn’t.
In 2000, I studied South Korea. I was appalled by the level of corruption in S. Korea during its intense period of industrialization and transformation. Corruption may contribute to poor economic performance but poor economic performance cannot be reducible to it. Since we really don’t know how the thieves spend their loot… we cannot be sure of its effects on the economy.
I end this debate now because I have a continent to govern and its people to unite – and Obama to advise. (Pun Intended).