President Dilma Rousseff and other speakers at the 15th IACC in Brasilia
“The world we want can only be built on transparency,” said Brazil’s President Dilma Rousseff in her opening remarks at the 15th International Anti-Corruption Conference (IACC) last week in Brasilia. She highlighted her country’s efforts toward greater transparency, including the recent passage of a freedom of information law and the introduction of e-platforms where citizens can monitor spending by various government agencies. At the same time, she emphasized that the state should not be the sole focus of anti-corruption efforts and that other sectors must strive for transparency and accountability as well.
The President also pointed out the crucial link between transparency, anti-corruption, and democracy. Speaking from experience, Rousseff (who spent almost three years in jail for taking part in movements against Brazil’s former military regime) noted that “efforts to fight corruption are by their nature pro-democratic. (…) The noise that comes with freedom is preferable to the dead silence of dictatorship.”
This year’s IACC gathered a record number of participants – over 1,900 people from 140 countries – illustrating that the fight against corruption is a key topic of interest to diverse stakeholders worldwide. Participants shared their stories about the destructive impact of corruption on development but also ways to address it. These are just a few of corruption-related facts discussed at the event that resonated most with me:
Indians shop for televisions at a big-box store. (Photo: BusinessWeek)
The middle class in emerging markets has started to draw attention as a force to be reckoned with. Economically, the global middle class has new-found wherewithal and an appetite for consumption, and in many cases is the product of upward mobility out of poverty. Politically, this demographic may bring new demands to assert itself in politics and policy. On October 9-10, Instituto Fernando Henrique Cardoso hosted a pair of seminars on “Democracy, Development, and Emerging Middle Classes.” This distinctive event was a joint effort with the Centre for Development and Enterprise in South Africa and the Centre for Policy Research in India.
Now, what the middle class is and what it means proved hard to pin down – and also fertile ground for debate. Those who focus on median income observe a significant, possibly fragile, shift away from poverty in Brazil and India. Others observe a qualitative transformation among certain groups, such as the expansion of the black middle class in South Africa through public service employment or a highly educated, globally connected middle class in India. The complexion of the middle class shifts depending on whether its members rely on the state or the market for their livelihood, and whether they are new or old entrants to this segment of society.
Photo (c) RIA Novosti. Sergei Venyavsky.
A bit of interesting news – The Russian Liberal Democratic Party (LDPR) is getting medieval on corrupt officials. The party just submitted a draft law in the Russian parliament that would brand public officials with a K (the first letter in a Russian word for corruption) on their hand for giving or receiving bribes. In addition to this, the proposal calls for banning public officials convicted of corruption from holding positions susceptible to bribery. The idea is that branding people for corruption would create a social disincentive to engage in bribery.
Do you think this would work?
The proposal got me thinking, however – what other unconventional anti-corruption efforts have been proposed or implemented? For instance…
India: A bill valued at 0 (zero) resembling a 50 rupee bill given to public officials – done! From the Economist:
One official in Tamil Nadu was so stunned to receive the note that he handed back all the bribes he had solicited for providing electricity to a village. Another stood up, offered tea to the old lady from whom he was trying to extort money and approved a loan so her granddaughter could go to college.
Kyrgyzstan: Chopping off hands or fingers of public officials – proposed by a member of parliament (in Russian).
Brazil: A short film contest to make the public aware of the dangers, costs, and mechanisms to fight corruption – done!
I find few interesting articles about Latin America and the Caribbean in either Washington Post on a daily/weekly basis. From my perspective, the latter does a better job covering the region and it is less sensationalistic than the former. The other day, the Post published a very good article.
In most of the countries of this important region of the world, technical instruction is absent in the education system. Individuals lack basic knowledge and training. Few have engineering degrees or come from a hard sciences background, and quality of education is poor. In fact, students across the region score low in performance tests. Low levels of education and poor quality affect a country’s competitiveness. Without well educated workers, businesses can’t work efficiently and innovation is highly limited.
To deal with this issue, the article reports that a Brazilian mining company – Vale – developed its own curriculum. Vale has schools in Brazil to train potential employees. There, students receive ample technical training and a salary. According to the Post’s article, almost 70% of the students are offered a job once they finish the course. There is no mention of the remaining 30%. However, one can assume that this group would find jobs in a similar company/industry thanks to Vale’s training. The company’s training is a positive externality. By training their potential employees, Vale is improving its competitiveness while bringing about positive effects to the economy.
In other countries of the region, entrepreneurs are working to improve the quality of education. In Colombia, Fundación Empresarios por la Educación works individually and with the government towards that goal. In Guatemala, the Colombian example led the business community to start a similar project
Vale’s training example, and efforts to improve quality of education in Colombia and Guatemala share a similar rationale. Without well trained and well educated individuals, with high quality education, businesses cannot compete effectively. In a broader sense, well educated people make better decisions and are more likely to have an active political culture. These examples are not only good for competitiveness in the short/medium term but for democracy in the long term, amidst the program’s limited impact.
(Revista Perspectiva published a dossier on education in its fifth edition. You can read it here in Spanish)
Entrepreneurship involves risk. According to a March 6th article in the Economist, “Betting the Fazenda,” Brazilian entrepreneurs are less willing to take risk than their Chinese and Russian counterparts. What could account for this? Well it doesn’t take long to figure out why once you look at the stats from the IFC’s “Doing Business” report. Here’s what the Economist points out:
Starting a business takes 152 days and requires 18 different procedures, according to the IFC’s annual worldwide “Doing Business” study. It takes 2,600 hours for a medium-sized business to keep up with its taxes each year. The same hypothetical business would pay 69% of its second-year profits in tax, if it played by the rules and did not receive special tax breaks.
Geez! Considering this, it makes me wonder why anyone would start a business in Brazil in the first place! These barriers are so onerous that it is no surprise corruption is so rampant. Overall, Brazil’s economy has been doing very well recently with a 5.1% increase in GDP in 2007 according to the IMF. Certainly, an increase in entrepreneurship would dramatically increase Brazil’s growth and further stabilize a country that has been on the brink of economic collapse in the recent past. This would bolster the positive democratic reforms that have been taking place. Let’s applaud Brazil’s success, but also recognize that if they want to compete globally, there’s a lot more to do.