Polls suggest economic performance trumps corruption in the eyes of votersBy Bangkok Pundit Jan 01, 2014 9:50AM UTC
Veera in an op-ed in the Bangkok Post on December 20:
Democracy, for the people, is not about a few minutes of exercising their right at the polling booth, which will return the same old incompetent or corrupt politicians to the parliament and then into the government.
The Thai people are sick of this vicious circle of incompetent or corrupt form of governance, be it by the Democrats, Pheu Thai or other parties which win elections.
They are not against elections as a matter of principle, but they want change for a better Thailand and a better future for the country. They want to put their house in order first, before we all go to the polls.
BP: Veera knows what Thais want?
The Nation in an editorial on December 23:
What happened after that needs not be retold. It should only be said that if “reform” is put in the hands of politicians, they most likely will not try to uphold the values. All they do is find loopholes and excuses, or complain why “values” are twisted and used in a conspiracy against them. On a Nation Channel recently, an academic hit home on the issue of reform. He said Thailand’s political strife was not caused by people having different values. Take away the “colours”, he said, and we will see that all Thais want the same things. Thais want clean, accountable politics that respects the voices of the people.
Thanong in the The Nation on December 27:
For, without reform, money politics would return to haunt Thailand, bringing back rampant corruption. The depth and breadth of Suthep Thaugsuban’s reform movement remains uncertain, but his message is clear: we need measures to overhaul police bureaucracy, decentralisation, and to rid our system of corruption.
The present show of “people’s power” is unprecedented. Never in Thai history have millions of people come out onto the streets, unified by a battle for justice and to end corruption.
Every year or so, there seems to be an ABAC poll about Thais accepting corruption by the government if they/country benefit. 63.2% in 2005, 76.1% in October 2010, 64.5% in July 2011, 65.5% in July 2013 all said this. As Saksith blogged in 2010 about the wording:
The most striking and disturbing figure of the survey showed that 76.1 percent accept corruption on government level for the sake of the prosperity and welfare of the country.
Last week, in the Washington Post‘s The Monkey Cage blog, they had a Post by Joshua Tucker who is a Professor of Politics at New York University. He stated:
In recently published research in the journal Electoral Studies, New York University politics PhD candidate Marko Klašnja and I used two survey experiments to examine the effect of corruption on voting behavior in a high corruption country (Moldova) and a low corruption country (Sweden). In both cases, respondents were asked how they would expect a citizen to vote in an election for a hypothetical mayor and were provided with two pieces of information. The first piece of information concerned whether economic conditions had improved or gotten worse in the mayor’s city; the second concerned allegations of either corrupt behavior in the city or actions on behalf of the mayor to fight corruption.
The results were illuminating. In Sweden, our “low corruption” country, voters punished the mayor for corruption regardless of the state of the economy. In Moldova, however, voters punished the mayor for corruption only when the economy was also bad. When economic conditions had improved, however, voters appeared less concerned about corruption.
We interpreted these findings as reflecting different realities. In a country like Sweden where corruption is less prevalent, any corrupt behavior is punished as unacceptable. In Moldova, where corruption is much more prevalent, voters may be more willing to tolerate corruption if the mayor can prove himself or herself “competent” along another dimension such as economic performance. Only when the mayor also proves to be a failure in terms of managing the economy do voters in our study also punish corruption.
BP: Isn’t this basically the same as the ABAC polls?
If you look at the data, you will see that as a general rule that richer countries have less corruption than poorer countries – see charts here. The question then is, why? Why do countries with higher GDP have lower corruption?
Some academics from MIT, Northwestern, and Duke have just published a paper on this issue regarding on Vietnam. They helpfully summarised the literature and then also come to their own findings in their conclusion:
A striking fact about government corruption is that, no matter how you measure it, it is higher in poor countries. For example, the 10 least corrupt countries in the 2009 Trans- parency International Corruption Perceptions Index, such as New Zealand, the Netherlands, and Canada, had an average real GDP per capita of $36,700; the 10 most corrupt coun- tries, such as Haiti, Turkmenistan, and Afghanistan, had an average real GDP per capita of $5,100.
This relationship is easy to see in the raw data: Figure 1 shows scatter plots of the two major corruption indices, the Transparency International Corruption Index and the World Bank Control of Corruption Index, plotted against real (i.e., PPP-adjusted) GDP per capita, and shows a clear downward-sloping relationship between corruption and GDP. The strong correlation between economic development and corruption does not appear to be an artifact of misplaced perceptions. Data on individual bribe payments from household surveys conducted in several countries show the same pattern (e.g., Mocan (2004)), as do survey data collected from firms around the world. Figure 2 plots the fraction of firms surveyed by the World Bank Enterprise Survey that reported they were expected to give gifts to public officials in order to “get anything done” against real GDP per capita, and once again, there is a downward-sloping relationship. While there is a general consensus about the cross-sectional facts, we know relatively little about why corruption is lower in rich countries. One hypothesis is that this pattern reflects a negative causal effect of corruption on economic growth: Corruption discourages investment which, in turn, depresses growth (Mauro, 1995; Wei, 1999a). Such a link suggests that rooting out corruption could be critical in achieving higher growth in developing countries. However, the correlation between income and corruption could also reflect the reverse causal link: Economic growth may reduce corruption, so as countries grow, corruption nat- urally declines (Treisman, 2000)
This paper establishes two empirical facts. The first is that economic growth (as measured by higher employment for a firm or industry) reduces the proportion of firm revenues extracted by government officials as bribes. The second is that the reduction in corruption caused by economic growth is larger in magnitude for firms that can more easily relocate due to stronger property rights over their land. We also find similar evidence of heterogeneous effects using a second measure of the ability to relocate, namely having operations in more than one province. These two facts map to the two main contributions of the paper. The first is a simple but important empirical contribution: We provide causal evidence on the effect of economic growth on the amount of corruption in an economy. Despite much interest in the relationship between corruption and development, there exists very little credible evidence of a causal relationship. The challenge is finding a way to separate causation from just correlation. We provide rigorous evidence by using subnational variation and an often-used identification strategy based on aggregate-level (national) shocks outside of a subnational region as a source of plausibly exogenous variation in the region.
Our results have several implications for understanding the determinants of corruption in developing countries. The finding that growth reduces corruption suggests that corruption might decline naturally as a country grows even without explicit anti-corruption efforts. While the effects we describe here might naturally operate via within-country competition in relatively large, decentralized countries such as Vietnam, one could imagine similar factors might also be at play for small countries, where the competition might be between countries rather than between regions of a given country.
BP: Now, you may say BP, doesn’t corruption affect growth? Yes, it does, but there is what is called the “Asian Paradox”. From an OCED issue paper:
A major puzzle in the discussion of the corruption-growth nexus is the combination of rapid growth and high levels of perceived corruption in many Asian economies. Over the period 1996 to 2011 the average GDP pc growth rate of a sample of Asian economies has exceeded the average growth rate in a sample of African countries with very similar levels of perceived corruption more than eightfold (Figure 5). Statistical analysis by Rock and Bonnett (2004) corroborates this observation: testing the impact of corruption on growth and investment in five large Asian developing countries separately from its effect in other small(er) developing countries, the authors find a positive and significant correlation between the level of perceived corruption and GDP per capita growth in the large Asian economies.
Various analysts have attempted to explain this phenomenon1. Whatever the underlying reasons explaining the remarkable growth performance of these countries, the relevant policy question is whether and why the observed growth cum corruption regime is more successful in generating rapid growth than reliance on competitive markets, and if so, why this advantage is exploited in the large Asian NICs, but not elsewhere. Another question is whether the superior growth performance achieved under the corruption cum growth regimes at the early stages of development can be maintained as these economies move towards higher value-added activities. While a number of plausible arguments has been advanced to elucidate the causes underlying the Asian paradox, a comprehensive and robust explanation lending itself to firm policy conclusions has so far not been found2.
More generally, several different mechanisms through which corruption may have a positive effect on output have been identified. For instance, if existing government rules and procedures are detrimental to growth, (Leff, 1964) or where their slow implementation may delay transactions and thus reduce efficiency (Batabyal and Yoo, 2007), bypassing them through corruption may actually benefit growth. However, the correct policy response would be to remove or modify the inefficient rules rather than tolerating corruption, which always has negative effects on general trust in the government and its legitimacy, as well as adverse effects on income distribution. Similarly, corruption in the form of theft of publicly-owned assets may lead to an increase in output if the new proprietors of the asset exploit it more efficiently. The efficiency-enhancing consequences of transferring productive assets from the public to the private sector have been studied extensively in the context of economic reforms in transition economies (Ehrlich et al., 1994). Little is known, however, about whether and how the legal modalities of this asset transfer influence their effect on output. In any case, it would seem counterproductive to defend theft and embezzlement of public property as a viable growth strategy, as it fatally compromises the “rule of law” – which is a key component of public sector governance, whose crucial effect on the performance of an economy has been well established by both theoretical and empirical research. The obvious policy response to a situation where private use of assets owned by the public sector enhances efficiency and output is to either sell or lease these assets through competitive and transparent auctions.
BP: Some final comments:
1. BP has not seen sufficient evidence that a majority of Thais regard corruption as the key issue; it is competence and actual performance of the government that leads to the country benefitting and prospering (economic growth) that is viewed as more important. One could then say -as per is also the case in Moldova – that a majority would not tolerate corruption if government performance/competence was bad. In some ways because of problems with the rice pledging scheme and other government policies together with lower economic growth in 2013, the Yingluck government is facing a problem, but still if an election was held today and the Democrats were to contest, BP thinks Puea Thai would win a plurality of seats (unlikely a majority although they will likely come close) and form the next government. Hence, in the calculus, when balancing out corruption and overall performance (Yingluck government still is helped out by the policies of her brother), enough voters still prefer Puea Thai.
2. Despite the consternation, if the theory that higher economic growth leads to less corruption is correct, isn’t the views of the majority of Thais surveyed by ABAC actually rational in being more concerned about competence and performance because ultimately economic growth will lead to less corruption in the long-term?