You’ve asked a million dollar question supplies work for countless teams of analysts, entire cohorts of graduate students, and shelves of library space. The answer comes in the form of a lot of complex, interlocking systems. The one thing we do know is that no nation is congenitally corrupt. Corruption will occur basically anywhere there is an opportunity for it, and less corrupt countries are no showing superior willpower or morality, but rather have developed structures that don’t create benefits for corruption.
Here are some scattered thoughts on a few of those:
- Money: This gets to be a little chicken-and-the-egg, but without skilled labor, reliable infrastructure and machinery, countries really do just have a lack of funds. Raw materials and farming, especially on marginal land, doesn’t make much money. The GDP of Central African Republic (CAR) is around $3.29 billion for a population of 4.4 million. For comparison, NASA gets about $18 billion. The GDP of the city of Phoenix is $200 billion.
CAR’s 2011 government expenditures was just $273 million, or about what The Avengers brought in on its opening weekend. To compare, that is the cost to build 4.2 miles of freeway in Portland. With this, they need to maintain a military to control their borders (or, much more economically, pay off local warlords to do it for you) because that’s the basic minimum requirement for actually being a country. Then they need to provide basic infrastructure, including at least some roads, electric lines, telephone facilities, etc. They need to pay their civil servants, which again is a basic definition of what it means to govern a country. This leaves precious, precious little for fostering business and economic growth, much less things like health and education systems.
The gaps this lack of money causes creates cascading effects and distorts everything, often in non-intuitive ways. It’s easy to complain about countries spending on military, but the alternative is paying off local warlords to keep bandits, greedy neighbors and rebels in control, and that’s even worse. It’s easy to complain about paying civil servants, but a strong civil service is the absolute foundation of government. Corruption actually happens most often when the civil servants aren’t being paid regularly and need to look towards outside funds.
- Macroeconomic realities
Poor countries face problems with hard currency. If you live in CAR and get paid in Central African Francs, you are being paid in a currency nobody anywhere wants, and it is worthless paper outside of the area. So what happens when the machines in your factory break and you need replacement parts from Germany? To develop, countries need medicine, machinery, and other things that are only available as imports.
Poor countries have a sharp need for hard currency (which they can really only get through exports, and export revenue is hard to get if you are poor and your neighbors are poor), and so they try to discourage citizens from spending any hard currency they run into on Cadbury bars, Nikes, and other non-essential items. This requires complex systems of currency controls, which creates even more market distortions and opportunities for corruption.
- Misguided macroeconomic policies
Three major policies have hurt poor countries. The first is the concept of “dependency theory”, which was a well regarded theory based on the idea that poor countries were dependent on their former colonizers, and to develop they needed to develop independent economies. A centerpiece of this was import substitution industrialization (ISI), where countries tried to give a “shot in the arm” to industries designed to replace imports- things like machinery, automobiles, and the like, in order to reduce dependency and conserve hard currency. ISI restricted imports in these industries to reduce competition, and provided economic favors to the new industries. In the end, this turned out to not really work, and this lead to debt crises.
Debt crises are another issue. In the 1980s, there was a huge crush of petrodollar lending, followed by a slowing and a crash that left developing countries suddenly unable to borrow the money the needed to keep their countries running.
And this is where the NGO proliferation comes in. In the 1990s, IMF was able to lend to these countries, but in exchange they required strict adherence to ideologically driven “poverty reduction” policies that required countries to liberalize their trade policies, privatize as much as possible, and basically gut their social sectors, including basic services like health and education. This is really what drove the para-governmental role that many NGOs play today. With governments restricted from providing these basic services, donors encouraged NGOs to fill in the gaps. This quickly became an ideological stance, with the concept that working through NGOs was better than working through corrupt governments. The US, for example, has pledged to funnel much of their money through local organizations.
This creates problems as well, as a government cannot build capacity when the best and the brightest are working for NGOs, and when the investment isn’t being made in making governments stronger and more effective. There is an entire branch of development focused on improving governance, but it’s new and everyone is still learning what works and what doesn’t. And it works differently in different countries. India, which has a strong public sector, has always had a strong stance towards development being best implemented by the government. Other countries are happy to save money by letting NGOs take over some of the costly but necessary services.
- Political realities
When African countries became independent, the rest of the world did a collective freak out and eliminated (through assassination, bribery and other means) an entire generation of the most capable and charismatic leaders in order to install less capable but more easily manipulated leaders. Then the US, Europe and the USSR proceeded to play proxy-warfare games all over the continent, propping up whoever seemed like the best guy to piss of the other team, without much regard for how they would actually manage the country.
Much of this generation was able to hold on to power well into the modern era, and Africa is just now seeing the last of the “dinosaurs” go. There is also some element of sticking with the devil we know. While we don’t like these leaders, we know they won’t do anything too unpredictable and we would rather work with them than whatever comes next. While we have now recognized that good governance is better for us in the end, we still sometimes are tempted to get our hands dirty. It will be interesting to see how our increasing focus on Africa and the war against terror affects our political interventions in the area for years to come.