A Proposal for Anti-Corruption Reform

 

Monica Prasad

Bureaucratic corruption—the use of public office for personal gain—stifles economic growth, engenders mistrust in public institutions, increases inequality and poverty, and undermines democratization (Svensson 2007; Olken and Pande 2012; Mo 2001; Gupta et al. 2002; Rose-Ackerman and Palifka 2016).

 

An earlier generation of scholarship wondered if corruption is simply a matter of different cultural values, and whether anti-corruption reform imposes Western ideals upon non-Western cultures. Since then, anthropologists have discovered that anti-corruption reform is popular all over the world, even among citizens of highly corrupt societies (Rothstein and Torsello 2014), and pollsters routinely find that corruption is one of the issues that most frustrates ordinary citizens in developing countries (IPSOS/MORI 2016; World Economic Forum 2016).

 

Earlier scholars also wondered if corruption had positive functions, contributing to economic growth by “greasing the wheels”; more recent scholarship has called this into doubt (Svensson 2007; Olken and Pande 2012) and found, moreover, that corruption harms most the poor and marginal members of a country (Olken 2006; Reinikka and Svensson 2004; Gupta et al. 1998) and often functions as a “Robin Hood in reverse” (Fokuoh Ampratwum 2008, 79).

 

However, despite two decades of sustained anti-corruption efforts from the international community, including international aid organizations and domestic and Western governments, bureaucratic corruption has proved remarkably durable throughout the developing world (Sampson 2010; Hough 2013; Fjeldstad and Isaksen 2008; Persson, Rothstein, and Teorell 2013).

 

A new approach to fighting corruption is needed. Our approach is inspired by recent scholarship that shows that even within countries known for widespread corruption, certain organizations are relatively free of corruption. This suggests an appealing strategy for controlling corruption by creating single organizations within a society that are relatively free of corruption—variously called, in the literature, “islands of integrity,” “islands of excellence,” “pockets of effectiveness,” “positive outliers,” and “interstitial bureaucracies” (Grindle 1995, 1997; Roll 2014; Zaloznaya 2012, 2017; McDonnell 2012, 2017; Prasad, Borges, and Nickow 2019).

 

Our focus on organizations provides a way to attack the problem on multiple fronts, but on a more manageable scale. In the long term, as more and more such islands are created, the culture of an entire country could be changed.

 

Background and the New Approach

 

The first generation of anti-corruption reforms focused on punishing individuals for corrupt behavior and rewarding them for non-corrupt behavior. But the scholarly community is settling on a consensus that such approaches are insufficient (Mungiu-Pippidi 2015; Persson, Rothstein, and Teorell 2013; Heilman and Ndumbaro 2002; Blundo and de Sardan 2006; Anand 2015; Collier 2000; North, Wallis, and Weingast 2009). In many countries, corruption is not a problem of individual deviance from the system; rather, corruption is the system, and everyone participates in corruption to some degree. Thus, programs to reward good behavior or punish bad behavior eventually fail because those doing the rewarding and punishing are themselves corruptible.

 

Corruption, that is, is a problem of the system, and must be addressed at the level of the system, and on multiple fronts at once. But how does one change a whole system, or attack a deep-rooted problem on multiple fronts?

 

In contrast to the scholars who argue for the reward/punish approach, a second set of scholars argues that system-wide change can only occur during moments of general social and administrative crisis, such as in the aftermath of catastrophic defeat in war. These unusual circumstances allow many aspects of the system to be changed at once, in a “big bang,” such that all participants move in a short span of time from a high-corruption equilibrium to a low-corruption equilibrium. For example, Teorell and Rothstein (2015) suggest that Sweden’s anti-corruption success was possible because of the sense of urgency that came from losing a war to Russia in the early nineteenth century, and Popa (2015) makes a similar argument for Britain in the nineteenth century. These studies suggest that a powerful shock to the system is necessary to generate an opening for rebuilding the formerly-corrupt system according to principles of transparency and accountability.

 

This argument is documented through an impressive number of case studies of the historical experience of the developed world. But this approach is not realistic as a practical anti-corruption strategy, as general crises cannot be predicted and, in their absence, openings for wholesale restructuring of the entire system are impossible to simulate.

 

Moreover, the “big bang” approach to anti-corruption reform neglects one of the most intriguing findings of recent corruption scholarship: otherwise highly corrupt societies are often dotted with “islands of integrity”--isolated organizations that are corruption-free. Present-day examples include the Kenya Tea Development Authority, which has long been recognized as an example of a successful development institution in a continent where such organizations are rare (Leonard 1991); the Ministry of Finance’s Directorate of Economic and Financial Cooperation and the Directorate of Statistics and Forecasting in Senegal (Johnson 2009); the Policy Analysis and Research Division in Ghana (McDonnell 2012, 2017); the Indian Institutes of Technology in India (Mistree 2012); and other examples in many different sectors in countries across the developing world (Grindle 1997). Historical scholarship has shown that when corruption was rife in western countries, examples existed of government agencies that were not corrupt, such as the excise bureau in eighteenth-century Britain (Brewer 1989) and the United States Postal Service at the turn of the twentieth century (Carpenter 2001).

 

We therefore argue that organizations—not countries—are the locus where the “big bang” can be implemented. Organizations have formal and informal cultures that, while engaged with the broader culture, often retain significant autonomy. Moreover, an organization is a sub-system that it may be possible to change through a concerted “big push,” if an organizational leader can be found committed to enacting reform.

 

Scholars who write about “islands of integrity” have demonstrated that these islands are possible. This is itself an important first step. Nevertheless, it is not clear whether these islands are doomed to remain isolated examples of integrity, or whether their practices can diffuse to other organizations and thereby create the template for widespread corruption reform. It is possible that these islands can maintain their integrity precisely because everyone inside and outside the organization knows that they are different from the surrounding context, and this sense of special status may be difficult to maintain on a wider level. Moreover, these organizations may be able to maintain their integrity because resources are concentrated on them, so that their staff do not need to resort to corruption; this too may be difficult to reproduce in other settings.

 

A Plan for Action

 

The next step in the research and policy agenda is to attempt to create an island of integrity. We would like to conduct an impact evaluation on three sets of comparable organizations, with one set serving as a control group, one set receiving the standard treatment for corruption reform (individual-level rewards and punishments) and one receiving our organization-level treatment.

 

Based on an extensive review of two decades of scholarship on corruption that we conducted for the United States Agency for International Development (Prasad, Borges, and Nickow 2019), the organization level treatment has four parts:

 

1. resources: our review of corruption teaches us that one cause of corruption is that salaries are not adequate to ensure a reasonable standard of living; thus, increasing salaries of staff to levels where they do not need to turn to bribes is a necessary—although not sufficient—criterion for change

2. definitions: another reason for corruption is unclear instructions on the difference between a gift and a bribe, and between private resources and public resources; clear definitions, along with monitoring to oversee the implementation of these definitions, is the second criterion

3. norms: a third key theme in the literature is that alternative definitions of morality, particularly those privileging ethnic and kin networks, contribute to corruption; thus, a key role for anti-corruption reform is fostering intrinsic motivation through measures such as bringing staff into closer contact with the results of the organization’s work or with clients

4. boundaries: islands of integrity struggle with their environments, and one key goal is drawing clear boundaries between the organization and its environment; particularly, managing very carefully the interfaces where the organization interacts with its environment (clients, suppliers, distributors, government)

 

How you can help

 

To implement our approach, we need to make contact with an organization that acknowledges it is corrupt, and is willing to try a new approach to change. We would work in-depth with this organization to identify how it can change, guided by our review of twenty years of scholarship.

 

If your organization would be interested in hearing more about this approach or implementing a pilot program, please contact us at

m-prasad@northwestern.edu

 

 

 

 

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