Fighting corruption essential to sustainable development

During last week’s annual World Bank Group meetings, a few participants and other interested groups raised the need to address corruption in order to pursue development. Multiple experts have highlighted the role that corruption plays in undermining sustainable development, and the need to tackle the problem of corruption. Recently, an article by Delia Ferreira Rubio of Transparency International and Elisabeth Andvig of the World Economic Forum laid out the challenges that corruption poses to achieving the UN’s Sustainable Development Goals (SDGs). Corruption is a major impediment to sustainable development. While corruption is clearly more deeply embedded in some countries than in others, as Transparency International’s 2018 Corruption Perceptions Index highlights, it exists in all states. The UN estimates that the combination of “corruption, bribery, theft and tax evasion cost some $1.26 trillion for developing countries per year” — money that could be used toward sustainable development instead. Corruption fundamentally undermines trust in institutions and exacerbates inequality, and it threatens the success of all 17 of the SDGs.

Improving health outcomes is one major area where corruption creates obstacles. Ferreira Rubio and Andvig note that, annually, “$7.35 trillion is spent on health care worldwide, but $455 billion is lost to fraud and corruption, leading to the deaths of more than 140,000 children.” Problems in this area include the need to pay bribes to receive health care and the selling on the black market of medicines intended for free or reduced-cost distribution. Education is another sector in which corruption can have damaging, long-term effects on development and can exacerbate inequalities.

There are many cases of parents paying bribes to school officials, teachers and test administrators to ensure that their children attend elite schools. This is a practice that strongly feeds inequality by reducing options for talented children who lack the means to buy their way into a school.

Corruption stymies private sector development. It creates extra costs for companies. It privileges companies that are connected to corrupt officials and willing and able to engage in corrupt practices, thus accruing benefits to themselves rather than to companies that might demonstrate better management, innovation, and overall competitiveness.

The natural environment also suffers from corruption. In many countries, environmental regulations are often not fully enforced, as violators pay bureaucrats to ignore their actions. This can have damaging, unhealthy effects on the environment and people.

There are solutions. Transparency International emphasizes the importance of strong, independent institutions, a free press that is able to report on corruption, and engaged citizens who can demand accountability. Beyond this, there is a wide variety of proposals. For example, coinciding with the World Bank Group meetings last week, Transparency International called for stronger transparency measures for the International Finance Corporation’s blended finance programs. Specific solutions will vary by country and sector but, fundamentally, governments should implement accountability throughout all layers of the bureaucracy and judiciary. Businesses and governments should work together to ensure a level playing field. Combating corruption alone will not ensure the success of sustainable development, but sustainable development will fail without progress against corruption.