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Corruption Causes and Maintains Global Poverty

Posted by Tony Listi on October 3, 2007 

Fighting poverty is a popular cause these days.  But if do-gooders are serious about reducing global poverty, fighting corruption is one of the best places to start, says the Wall Street Journal.


  • Corruption keeps poor countries poor by squirreling away resources in the hands of elites, who spend the gains on, at best, inefficient public works and at worst, private ends.
  • Corruption also drives away foreign investment and discourages local entrepreneurs from starting new businesses.

According to Transparency International’s annual Corruption Perceptions Index (which scores countries on a scale from zero to ten, with zero indicating high levels of perceived corruption and ten indicating low levels of perceived corruption):

  • The world’s poorest countries — Burma or Bangladesh, etc. — languish at the bottom of the list, while the world’s richest countries get top marks.
  • Some 40 percent of the countries that have “rampant” corruption are also desperately poor — a trend that’s endured since the poll’s inception in 1995.

That doesn’t mean that corrupt countries don’t attract investment, says the Journal.  China, which tied with India at a middling rank, pulled down $63 billion of foreign direct investment, despite widespread corruption in the Communist Party ranks.  But imagine how much money the mainland would receive if it made a more serious effort to bolster its legal system and enforce clean business practices — like Hong Kong does, which ranks number 14.

Source: Editorial, “Combating Corruption,” Wall Street Journal, October 2, 2007.

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