What is the difference between countries with developed economies and those with fragile economies? Countless factors: culture, geographic location, resources, among others can be listed. Regardless of the differences between countries, in general, the level of development revolves around the economic system and the administration that the government makes of it. It can be said that economics is the heart that provides welfare to society, while the government is the brain that regulates the whole organism. In other words, if the government uses the resources properly, if it efficiently invests the energy that the economy provides, the whole organism will prosper.
The investment in culture, education, health, helps society to work well. If those mechanisms work properly, the economy will grow and the money will flow freely generating more energy that can be used again for the growth of society. On the other hand, if the government allows the organism to get sick, if it doesn't control properly social problems like inequity, poverty or violence, society will end up failing and fracturing, sometimes irrevocably. All these problems lead to the same origin, corruption.
According to Transparency International, corruption is the “abuse of power entrusted to benefit a personal interest; it can be classified as grand, petty and political depending on the amount of money lost and the sector in which it occurs ”.
Grand corruption consists of acts committed at a high level of government that distort policies or the central functioning of the state, enabling leaders to benefit at the expense of the public good.
Petty corruption refers to everyday abuse of entrusted power by low- and mid-level public officials in their interactions with ordinary citizens, who often are trying to access basic goods or services in places like hospitals, schools, police departments and other agencies.
Political corruption is the manipulation of policies, institutions and rules of procedure in the allocation of resources and financing by those who administer them.
It is important to understand this definition to avoid ambiguities, as this problem has often been misunderstood as a moral problem; its a common belief that corruption exists because of a few politicians of doubtful morals who misuse their power. However, corruption cannot be understood as an individual problem isolated from the context. More than a moral or cultural problem, it is an economic problem because it is directly associated with the distribution of wealth; the resources received by the state are not reinvested in society.
Returning to the metaphor of the organism, the blood that keeps the body alive is not flowing. If the blood does not flow, eventually the entire system fails and collapses. Due to this stagnation of wealth, corrupt economies are characterized by a low percentage of the middle class and a significant gap between the upper and lower classes. On the other hand, because clean competition and the proper functioning of the state and the market are not guaranteed, investors distrust the country market. Therefore, the flow of foreign capital is stopped, sometimes even reversed, this means investors withdraw the money invested.
According to an article in Investopedia, a web page specialized in economic issues, this distrust also affects innovation. If the legal authority can be manipulated, companies won't have any guarantee that their patents will be protected and not falsified. This is one of the reasons that explain why countries with emerging economies and high rates of corruption are forced to import technology instead of producing it.
According to World Bank data, the average income in countries with a high level of corruption is about one third that of countries with low levels of corruption. In addition, the infant mortality rate in these countries is three times higher and the literacy rate is 25% lower. Since the political system works closely linked to the economic system, corruption is a defect in the relation of these aspects; it is a structural failure.
This failure can be seen as a defect that must be reduced or as a factor that was not taken into account in the construction of the political and economic system and that must be accepted and legalized. In either case, the most effective way to deal with the problem is to restructure the relationship between the political system and the economic system. These types of measures have already been successful worldwide.
Although the most common measures are others: increasing judicial punishments or creating surveillance institutions, among others. These kind of solutions focus on attacking the problem, bus as evidence suggests, aggressive measures alone are not enough to effectively reduce corruption.
Singapore's case stands out as one of the success stories in the fight against corruption. This country was a British colony that became independent in 1963. In just over fifty years, this nation has become one of the most prosperous in the world with a per capita GDP of 57,000 in 2017. The reasons for this success are attributed to strict measures taken by former Prime Minister Lee Kuan Yew that for 30 years transformed the economic and political structure of Singapore.
One of the measures was to increase the salary of officials. According to the politician ideology, when officials receive good salaries, they would avoid being tempted to accept bribes, not to mention that a good salary would attract the best professionals. As the country began to prosper economically, wages became proportional to a position of the same level in the private sector. According to an article from the World Economic Forum, last year the average payment for an executive director in Singapore was $ 673,000, the payment of a minister was more than $ 800,000.
Another of the administration's measures was zero tolerance for corruption, the CPIB (Corrupt Practices Investigation Bureau) was authorized to investigate any public official without the need for a special authorization, in particular to investigate senior politicians. According to the law of the Asian country, not only those who accept bribes but also those who offer them are punished with fines or deprivation of liberty, not to mention that the former must return all the bribe money.
Finally, one of the government's latest strategies to prevent corruption has been to digitize government services. As a result, an officer is less likely to demand bribes in the bureaucratic process.
This case explains why —according to the International Monetary Fund — Qatar, Singapore, Ireland and Luxembourg being countries much smaller than others are among the richest in the world in terms of purchasing power per capita. It is not about the size of the country or the amount of resources, but about the management strategy of the economic system. An intelligent administration generates a chain reaction of benefits, a cycle of growth and development that sustains itself .