Words ought to be a little wild, for they are the assault of thoughts on the unthinking
- J.M. Keynes

Monday, 3 December 2012

Tale of Two Corrupt Countries

My latest column looking at the India-China story from the viewpoint of corruption:

Wealth can empower change

The Indian politician’s dismissal of public outrage over corruption goes back to Indira Gandhi, who trivialized it as being a global phenomenon. She was right, but what she glossed over was that the extent and type of corruption differ greatly between nations. It is this difference that translates into development and the quality of life for a country’s citizens.
 
Usually when we complain about corruption, it is the extent with which we are bothered and its intrusion into our daily life. The correlation between the extent of corruption, captured by Transparency International’s rankings, and economic development is well known (Graph 1). Unsurprisingly, New Zealand, Denmark and Finland are at the top of Transparency International’s rankings, while North Korea and Somalia languish at the bottom. However, this is not the whole story. Over the last 14 years, despite a relatively small difference in Corruption Perceptions Index (CPI) rank, China has left India far behind in economic development as measured by per-capita gross domestic product, or GDP (Graph 2).
 
China’s faster development can be explained not by the extent, but by the type of corruption prevalent there.
 
For the rest of the article (including graphs) go here.
 

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