Download Integrity, corruption and Development in Arab Countries

Integrity, Corruption and
Development in Arab Countries
A Systemic Perspective
Ahmed Sakr Ashour
April 2006
The Anticorruption Scene in
the Arab Region.
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Interest in combating corruption in the Arab Countries has been
rising over the last decade.
Chapters of TI were established in almost half of counties of the region.
A number of regional conferences were held on the subject.
A regional anticorruption organization headed by Dr. Selim Al-Huss
was established and held its first conference in Beirut last year.
Another regional organization of Parliamentarians Against Corruption
along with national chapters were also established two years ago.
Arab states are starting to join the UN convention against corruption.
An increasing number of Arab countries are taking a set of measures
to confront corruption including establishing anticorruption entities
(e.g.. Jordan)
National and Pan Arab activist organizations and groups are
bringing the issue of corruption in Arab Countries under the lime
light.
 The independent media in a growing number of Arab countries are
focusing on and publishing about corruption incidents, cases and
issues.
 Regional and international organizations (e.g. ARADO, TI, UN,
UNDP, POGAR of UNDP, World Bank, World Economic Forum)
have held meetings and published studies on the issue in the region.
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The Reform Scene
Various Initiatives have been taken over the last two decades:
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Economic restructuring and reform policies including privatization
have been adopted by almost all countries of the region.
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Various political liberalization and democratization initiatives have
been taken over the last five years.
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The public sector have been the focus of various administrative
modernization and reform initiatives.
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Some of them were with the support of international organizations.
Why Interest in Reform and in
Combating Corruption is Rising?
The Arab region has been experiencing stagnation in development and
growth over the last two decades, and has been lagging behind in
economic performance compared to the rest of the world.
For Example:
 Annual growth in per capita income was 0.5 % which is less than sub-Sahara
Africa. This rate was 5% for East Asia.
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Export performance grew by 1.5 during the 1990s , compared to 6% for the
world.
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The share in foreign investment during the last decade was less than 1% of
FDI in developing countries. This percentage was 59 % for East Asian
countries.
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Indicators of unemployment , productivity and poverty point to the slow and
sluggish development performance.
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To what extent is the slow and sluggish development performance of the Arab
region a function of:
 Corruption
 Reform Deficiency
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Answering this question sheds a great deal of light on the importance of
combating corruption and of engaging in a set of profound and comprehensive
reforms for unleashing the forces for development and growth in the region.
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Tackling corruption and reform deficiency are related. As will be illustrated
later, the effective combating of corruption require the uprooting and tackling
of its causes and underlying factors.
A look at the Corruption Scene
in the Arab Region
Corruption Perception Index(2005):
Country
World
Rank
Arab
Region
Rank
Country
World
Rank
Arab
Region
Rank
Score
Score
Oman
28
1
6.3
Syria
70
10
3.4
United
Arab
Emirates
30
2
6.2
Morocco
78
11
3.2
Qatar
32
3
5.9
Lebanon
83
12
3.1
Bahrain
36
4
5.8
Algeria
97
13
2.8
Jordan
37
5
5.7
Yemen
103
14
2.7
Tunisia
43
6
4.9
Palestine
107
15
2.6
Kuwait
45
7
4.7
Libya
117
16
2.5
Egypt
70
8
3.4
Iraq
137
17
2.2
Saudi
Arabia
70
9
3.4
Sudan
144
18
2.1
Looking at the CPI
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Most Arab countries fall below the median (median = 80).
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Some Arab countries had a score and a rank close to other countries:
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Oman is equal to Israel and close to Portigue and Astonia.
EAU is close to Slovenia.
Qatar is equal to Botswana, Taiwan and Uruguay.
Jordan is equal to Cyprus and close to Malaysia.
The magnitude and seriousness of corruption is in some cases greater
than what CPI indicates. This has to do mostly with grand corruption
which is likely to be hidden. Grand and state capture corruption is a
great problem in many Arab countries. The CPI methodology mostly
reflects administrative/petty corruption
Relationship Between Corruption, its
Infrastructure and Development
Results from an ongoing project supported by POGAR on combating corruption.
Development/Governance Indicator
Simple Correlation
Number of
Countries
Human Development Index (HDI)
0.701 (**)
142
GDP Per Capita
0.875 (**)
139
Economic Growth Rate
-0.366 (**)
139
Poverty Index
-0.522 (**)
101
Unofficial Economy
-0.674 (**)
69
Foreign Direct Investment as Percentage of World Flows
0.412 (**)
146
Competitiveness Index
0.917 (**)
104
Spending on Education and Health as Percentage of GDP
0.571 (**)
107
Spending on Education as Percentage of GDP
0.334 (**)
107
Spending of Health as Percentage of GDP
0.690 (**)
140
Governance Indicators:
Voice and Accountability
Political Stability
Government Effectiveness
Regulatory Quality
Rule of Law
Control of Corruption
146
0.684 (**)
0.790 (**)
0.935 (**)
0.827 (**)
0.920 (**)
0.962 (**)
Competiti
-veness
(R = 0.917)
Expenditure
On
Health
(R = 0.690)
GDP Per
Capita
(R = 0.875)
Unofficial
Economy
(R = 0.674)
Share
in FDI
(R = 0.412)
Poverty
(R = 0.522)
Expenditure
on
Health
and Education
(R = 0.571)
Corruption
Control of
Corruption
(R = 0.962)
Government
Effectiveness
(R = 0.935)
Rule of
Law
(R = 0.920)
Regulatory
Quality
(R = 0.827)
Political
Stability
(R = 0.790)
Governance/Institutional Infrastructure
Voice and
Accountability
(R = 0.684)
Institutional and Legal Reforms
Against Corruption that Have Been
Taken by Most Countries of the Region
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Arab government have transformed their address from denial to admission of
the problem of corruption.
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Anticorruption reforms in the region have mostly been legalistic and
institutional in nature.
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The measures commonly taken are:
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Activating and strengthening the role of control agencies and extending their out
reach.
Establishing anticorruption bodies reporting to the government.
Passing a set of anticorruption laws.
Prosecuting and trying corruption cases involving high state officials.
Declaring that the government is adopting anticorruption posture.
Introducing modernization and reforms to the civil service system and government
administration.
Introducing other institutional reforms (e.g. The Judiciary)
The legal and Institutional
Initiatives Against Corruption Have
Been Mostly Cosmetic
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Corruption continues to thrive in virtually all domains of economic,
administrative and political activity across the Arab region.
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The legal and institutional reforms were:
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Not attacking the system under which corruption thrives.
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Not integrated into a comprehensive plan and a strategy.
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Not backed by strong political support.
There is More to the Reform Against Corruption
Than the Legal and Institutional Measures,
Even if They Represent a Comprehensive All
Out Attack
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Corruption in the region is high in both types:
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Grand/ state capture
Petty/ administrative
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Grand corruption is widespread in all countries of the region.
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Petty corruption (especially bribes) is more common in the middle and
low income countries.
The Underlying Factors of
Corruption in the Region:
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Governance: Countries of the region suffer from governance deficiency
or gab. This has been well documented (World Bank, 2003).
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Broadly speaking, governance has two fronts:
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Political Infrastructure of the state.
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The institutional Infrastructure of the public sector.
The governance gap the region suffers from is on both fronts.
But There is More to the
Underlying Factors of Corruption
in the Region:
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The Economic Infrastructure:
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Most countries of the region have economies that rely greatly on rent.
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Rent-seeking is a common economic activity in the region.
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Non productive sectors (rent seeking, rent-based and a sizeable portion of
the government) represent a significant segment of the region’s economies.
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The public sector remains to overwhelm the economic life in most
countries of the region.
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Many economic sectors of these countries are monopoly-based.
The Social/ Cultural Infrastructure
(Societal and Administrative Ethics)
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The tribes and the nucleus family is a powerful social force in most
Arab societies. This explains the spread of nepotism.
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The spread of corruption in various spheres of life made people
tolerant and accustomed to corruption.
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Cultural and ethical reform is not part of the official reform address or
agenda in all countries of the region.
Corruption is Much More Complex and Deeply
Rooted in the Region Than the Implicit
Assumptions Underlying the Reforms Adopted
or Applied so Far
Effective combating requires:
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Integrated multidimensional reform.
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Political reform represent the obstacle and the real solution, especially for
grand corruption.
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Crafting a strategy that tackles the causes and that fits the governance
conditions of each country.
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Establishing a broad coalition among anticorruption and pro-integrity
forces/ stakeholders including invigorating of the civil society.
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Monitoring the success
program/measures.
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Tackling the sectors and institutions infected by corruption the most and
critically impacting on development (e.g. legislature, judiciary, police,
election system, political parties, financial sector)
and
progress
of
the
anticorruption