Pacific Perspective
Pacific Perspective
Asian corruption
undermines developmentThe use of what we in the West call bribes has been a common practice in Asia for as long as there have been business records -- 3 or 4 millennia, thanks to the Chinese.
In every country it has a name, whether that is "guanxi" or the equivalent of "greasing the skids."
But when treated as "greasing the skids," corrupt practices are often left without context.
To many multinational corporations, bribes are just another business expense that is compensated for by cutting expenses elsewhere or by adding to the price the contractor (or the host government or the host society) pays. Builders have been known to throw into construction cement cheap and even non-functional materials as a means of recouping costs (especially when inspectors have been paid to look the other way). Such buildings (including a shopping center in South Korea) have fallen down with the consequent deaths of many.
Inferior materials are used in road building, resulting in limited traffic flows for domestic commerce as the roads deteriorate, and early and extensive repair costs become the hidden costs of non-competitive contracts.
In Southeast Asia, the bribery of officials to obtain logging rights has resulted in considerable deforestation that has, in turn, been followed by top soils being washed into waterways (the loss of agricultural land) and pollution of fishing waters (diminishing fish resources), along with the loss of oxygenating vegetation and the exacerbation of global warning.
Transparency International (www.transparency.org) -- a respected non-governmental body based in Berlin that has monitored corruption throughout the business world -- has undertaken a variety of efforts to assess and begin limiting both acts of corruption and their effects.
The group regularly updates its Corruption Perception Index as advice to foreign investors and others who seek to enter these volatile markets.
Its index, reinforced by measures of professional political risk firms like the International Country Risk Guide (www.icrg.com), is not only a good warning to investors but is also a forecast of how economic development will progress.
In the latest report -- the 2001 Corruption Perceptions Index -- Transparency International presents data that indicate that the less the level of development, the greater the corruption. At the present rate, the development gap is only likely to widen in Asia. In the top quarter of countries (less corruption) are only Singapore, Hong Kong, and Japan, of 14 Asian countries analyzed. In the bottom half are China (57th out of 91), Thailand (61st), the Philippines (65th), India (71st), Vietnam (75th), Pakistan (79th), Indonesia (88th), and Bangladesh (91st).
Particularly problematic in view of today's terrorism crisis are the corruption levels (and development prospect levels) of those countries with significant Islamic populations: Indonesia, with the world's largest Muslim population; India, the second largest; and Pakistan and Bangladesh, both formed as Islamic states.
The Far Eastern Economic Review recently cited Bangladesh as a significant growing danger to regional security because of growing Islamic radicalism.
The Philippines is dominated by its Catholic population but faces a major rebellion in its predominantly Muslim south. A growing force of U.S. troops is already assisting in training of Philippines forces trying to control those radical forces.
While not trying to explain away the sometimes astonishing levels of poverty in the Islamic world, the cycle of totalitarian government, poverty, corruption, discontent and civil violence that can be seen in this Asian group should draw concerted attention. While China continues to be characterized by high levels of corruption that seem linked with centralized authority, it is the only country in the set analyzed by Transparency International that it indicates is making any headway against the corrupt forces that strangle development processes.
Llewellyn D. Howell is director of the international executive MBA programs for the University of Hawaii at Manoa College of Business Administration. Reach him at lhowell@cba.hawaii.edu.