Corrupting the Fight Against Corruption

At its recent annual meeting, World Bank officials spoke extensively about corruption. It is an understandable concern: money that the Bank lends to developing countries that ends up in secret bank accounts or finances some contractors’ luxurious lifestyle leaves a country more indebted, not more prosperous.

James Wolfensohn, the Bank’s previous president, and I are widely credited with putting corruption on the Bank’s agenda, against opponents who regarded corruption as a political issue, not an economic one, and thus outside the Bank’s mandate. Our research showed systematic relationships between corruption and economic growth, which allowed us to pursue this critical issue.

But the World Bank would do well to keep four things in mind as it takes up the fight.

First, corruption takes many forms, so a war on corruption has to be fought on many fronts. You can’t fight the diversion of small amounts of money by weak and poor countries while ignoring the massive diversion of public resources into private hands of the sort that marked, say, Russia under Boris Yeltsin.