On corruption and development
Saturday, 20 December 2008
Jahangir Bin Alam
In free market economies, most domestic investments - be it in the trading, services or manufacturing sector, derive from incomes generated mostly through collective or individual corruptions in various forms. This has been the practice over the centuries in almost all the countries of the world, irrespective of their governance status. This statement may appear puzzling to many, but I am afraid it is the reality. To know the truth one doesn't need to be a scholar in development economics. Anyone with an iota of intelligence could verify this, upon in-depth study of the history of economic development of any particular country, especially the developing ones.
But, the irony is, money earned through corrupt means when invested in productive purposes makes significant contribution to the overall growth and development of a country's economy. That is it helps create jobs, enhances national wealth and subsequently help generate increased revenue for the government. But when such money is spent on personal luxury or siphoned out of the country and invested in other countries, it only benefits the individuals doing such mischiefs to the detriment of the national interest. Interestingly enough, at times it so happens that siphoned-out money is recycled to the home country as foreign direct investment, which, though unethical on the face of it, yet undeniably benefits the economy of a country. On proper scrutiny, one would find several such investments that have taken place in Bangladesh.
Prevalence of corruption in the public sector is an open secret. Every one including the agency responsible for its prevention is aware of this phenomenon. The various forms in which it takes place in the public sector are -- kickbacks from big projects shared by powerful quarters including the politicians and decision-makers in the government, senior bureaucrats and at times by politicians in the opposition, bribery resorted to by corrupt members of the bureaucracy, a section of the judiciary (both at the lower and higher levels), a section of the law enforcement agencies, and small-scale bribery and larceny of mid- and lower-level public servants including the trade union leaders.
Private sector corruption takes place mainly in forms like evasion of income tax through hiding income and wealth, evasion of custom duties, VAT etc, through misdeclaration, over- and under-invoicing in import/export trading, concealment of actual commission earning and evasion of utility services bills etc.
Looking at innumerable high-rise residential buildings, apartment blocks and shopping malls, hotels, restaurants and fast food outlets, private hospitals and clinics, schools, colleges and universities and the number of private vehicles on the roads -- almost all of which could be attributed to corrupt money, how can one say that corruption does not have any good side, in spite of its being unethical and immoral? Although economists/experts, both local and foreign often say that had there been no corruption in the country, Bangladesh's GDP could have grown by at least two percentage points more.
The above observation made by this scribe may appear puzzling to many. Believe me this has not been made to glorify corruption; but the irony is, it's a reality, whether one accepts it or not. (The writer is former Secretary, Foreign Investors' Chamber of Commerce & Industry (FBCCI). He may be reached at e-mail: jbalam44@yahoo.com or jbalam44@hotmail.com)
In free market economies, most domestic investments - be it in the trading, services or manufacturing sector, derive from incomes generated mostly through collective or individual corruptions in various forms. This has been the practice over the centuries in almost all the countries of the world, irrespective of their governance status. This statement may appear puzzling to many, but I am afraid it is the reality. To know the truth one doesn't need to be a scholar in development economics. Anyone with an iota of intelligence could verify this, upon in-depth study of the history of economic development of any particular country, especially the developing ones.
But, the irony is, money earned through corrupt means when invested in productive purposes makes significant contribution to the overall growth and development of a country's economy. That is it helps create jobs, enhances national wealth and subsequently help generate increased revenue for the government. But when such money is spent on personal luxury or siphoned out of the country and invested in other countries, it only benefits the individuals doing such mischiefs to the detriment of the national interest. Interestingly enough, at times it so happens that siphoned-out money is recycled to the home country as foreign direct investment, which, though unethical on the face of it, yet undeniably benefits the economy of a country. On proper scrutiny, one would find several such investments that have taken place in Bangladesh.
Prevalence of corruption in the public sector is an open secret. Every one including the agency responsible for its prevention is aware of this phenomenon. The various forms in which it takes place in the public sector are -- kickbacks from big projects shared by powerful quarters including the politicians and decision-makers in the government, senior bureaucrats and at times by politicians in the opposition, bribery resorted to by corrupt members of the bureaucracy, a section of the judiciary (both at the lower and higher levels), a section of the law enforcement agencies, and small-scale bribery and larceny of mid- and lower-level public servants including the trade union leaders.
Private sector corruption takes place mainly in forms like evasion of income tax through hiding income and wealth, evasion of custom duties, VAT etc, through misdeclaration, over- and under-invoicing in import/export trading, concealment of actual commission earning and evasion of utility services bills etc.
Looking at innumerable high-rise residential buildings, apartment blocks and shopping malls, hotels, restaurants and fast food outlets, private hospitals and clinics, schools, colleges and universities and the number of private vehicles on the roads -- almost all of which could be attributed to corrupt money, how can one say that corruption does not have any good side, in spite of its being unethical and immoral? Although economists/experts, both local and foreign often say that had there been no corruption in the country, Bangladesh's GDP could have grown by at least two percentage points more.
The above observation made by this scribe may appear puzzling to many. Believe me this has not been made to glorify corruption; but the irony is, it's a reality, whether one accepts it or not. (The writer is former Secretary, Foreign Investors' Chamber of Commerce & Industry (FBCCI). He may be reached at e-mail: jbalam44@yahoo.com or jbalam44@hotmail.com)