Legal Aspects of Combating Corruption: The Case of Zambia
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Legal Aspects of Combating Corruption: The Case of Zambia By Ken ...

Chapter 1:  Introduction
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Myth #3: The importance of governance and anti-corruption is overrated. Thanks to these and other advances in empirical measurement, a number of researchers have examined the impact of governance on development. The research generally shows that countries can derive a very large ‘development dividend’ from better governance. We estimate that a country that improves its governance from a relatively low level to an average level could almost triple the income per capita of its population in the long term, and similarly reduce infant mortality and illiteracy. Such a relative improvement (by one standard deviation) would correspond, for instance, to a move up in our ranking for the ‘control of corruption’ dimension in our database, taking Equatorial Guinea to the level of Uganda, Uganda to Lithuania, Lithuania to Portugal, and Portugal to Finland.27

According to Kaufmann, governance matters for a country’s competitiveness and for income distribution.28 He adds that, in the case of corruption, research suggests that it is equivalent to a major tax on foreign investors.29 In many developing countries, it is argued, corruption represents a ‘regressive tax’ on the household sector as well: lower-income families pay a disproportionate share of their incomes in bribes to have access to public services (compared with higher-income groups) and often end up with less access to such services because of corruption.30 Kaufmann observes further that a rough estimate of the extent of annual worldwide transactions that are tainted by corruption puts it close to $1 trillion.31 He posits that aid-funded projects tend to fail in corrupt settings.32 Therefore, ‘corruption undermines fledgling democracies. And governance is not the only thing that matters for development. Macroeconomic, trade, and sectoral policies are also important. But when governance is poor, policymaking in other areas is also compromised.’33 And it is a myth to argue the following:

Governance is a luxury that only rich countries can afford. Some claim that the link between governance and incomes does not mean that better governance boosts incomes, but the reverse—higher incomes automatically translate into better governance. However, our research does not support this claim. It is thus misleading to suggest that corruption is due to low incomes, and invent a rationale for discounting bad governance in poor countries. In fact, the evidence points to the causality being in the direction of better governance leading to higher economic growth. A number of emerging economies, including the Baltics, Botswana, Chile, and Slovenia, have shown that it is possible to reach high standards of governance without yet having joined the ranks of wealthy nations.34