Corruption and Liberalization

Corruption is one of Africa's endemic problems. Indeed, it is a key issue in Nigeria's approaching presidential election, given President Obasanjo's high-minded but failed struggle to curb it. But the winds of globalization were supposed to blow away the cobwebs of bribery and inefficiency. Harvard political scientist Devesh Kapur suggests why this is not happening.

Evict the state from direct economic activity, curb its discretionary powers, and both economic efficiency and governance will improve. Developing countries have been nagged about this for years. By opening economies to international competition and investment, governments will supposedly become disciplined because they will be watched over by international financial capital.

There is undoubtedly merit in shrinking the size of government and making it less intrusive. Uganda is a case in point that this can bring early benefits. Yet official corruption has clearly not declined in the way liberalization's promoters said it would, nor has governance improved markedly for the better in most countries. Why?

First, opening an economy bids up the price of talent. In India a decade ago, students who chose careers in public service could expect lifetime earnings of between a fifth to a third of their private sector counterparts. Today, they get less than 10%. The highest level civil servant or chief justice of the Supreme Court at the end of their careers is nowadays paid barely half the salary of graduates of India's elite educational institutions, who are snapped up by the global economy.