Corruption is not directly correlated to economic progress.
http://www.odi.org/comment/6954-corruption-golden-thread-development-governance
"The first inconvenient truth is that corruption does not affect aggregate development performance as much as we might think. Here, the evidence suggests that what matters most is how corruption is managed and how it relates to different forms of political systems. More generally, the direct causal impact of corruption levels on economic growth and other development outcomes is difficult to prove.
Which leads us to the second, perhaps most important, inconvenient truth.
Corruption is a symptom of existing problems, not a cause of poverty or slow development. Typically these underlying issues are political in nature. They are related to lack of incentives, lack of programmatic (rather than patronage) politics and/or checks and balances on politicians who, faced with a choice, continue to protect their own interests and those of the elites who support them, in the absence of any good reason to do anything different.
The third inconvenient truth, related to the first two, is that various attempts to eliminate corruption have not worked all that well. Many things have been tried by development agencies over the past 20 years, including anti-corruption commissions, strengthening horizontal or vertical accountability mechanisms with more effective audits and greater citizen pressure. The results have been mixed, at best. So, we are still in search of ‘what works’ in the fight against corruption. "
http://swaminomics.org/corruption-and-economic-growth/
"Businessmen in surveyed countries said that the main problem with corruption was that it increased risks and uncertainties. These risks declined dramatically if corruption produced reliable outcomes (as in Indonesia). If all players had to pay 10% and could sure of getting their licences, (Madam Suharto was called Madam 10%), entrepreneurs’ could treat this as just one more tax, factor it into their calculations of returns, and so invest with confidence.
http://www.globaldashboard.org/2012/03/09/is-corruption-one-word-or-many/
"In many countries, corruption actually is not viewed negatively but is seen as a positive force and reflects a value system that prioritizes loyalty to family and clan over that to an impersonal institution. In such places, it may be so important to maintaining stability and reinforcing the glue that holds together a state that eliminating it—which would be impossible in any case—would have dire consequences. As one writer on Pakistan commented, “Western language about ‘corruption’ in Pakistan suggests that it can and should be cut out of the political system; but in so far as the political system runs on patronage and kinship, and corruption is intertwined with patronage and kinship, to cut it out would mean gutting Pakistan’s society like a fish.”"
"In China, for instance, although corruption is deeply rooted and widespread, it does not necessarily determine the allocation of key resources in most cases. While it serves to reduce efficiency, increase costs, and can produce egregious results at times, given the low overall level of development in the country, it does not have a large effect on growth (though this will change as the country grows richer). On the contrary, it may actually act as a lubricant to circumvent stifling regulations and smooth the establishment of the trust necessary for businesspeople to have enough confidence in officials to want to invest at times."
"Some scholars consider the differing levels of public trust (i.e., the level of trust between strangers) the determining factor behind which type of corruption a country has. Others deem the deciding factor the degree to which a political elite can operate with a long-term horizon and can centralize economic rents."
"Countries would be far better off without corruption (and associated practices such as rent-seeking and neopatrimonialism) in the long term. But they should not always be seen as the primary barrier to progress at early stages of development. Instead, other problems—such as weak social cohesion or the lack of security for investments—are probably at work. Corruption is typically a symptom of a deeper malaise, not the cause of that malaise."
http://swaminomics.org/why-does-corrupt-india-grow-fast/
http://swaminomics.org/china-beats-india-again-this-time-in-corruption/
Corruption not the most serious problem of Pakistan
http://tribune.com.pk/story/321518/imran-jinnah-and-pakistans-problem/
"Pakistan’s breaking up, 25 years after being formed, was not because of corruption. The decades of military rule and the rise of the jihadis are not because of nepotism. Pakistan’s economic condition is not the doing of black marketeers.
What are the problems then? To the outsider, it appears there is only one. The orientation of the Pakistani state is wrong. And it isn’t aligned correctly because of its ideology, whose prenatal trait is more pronounced each passing decade. This flaw produced the state’s resolve to defy India at all costs and the subsequent dominance of the army, which has led to the emasculation of its political parties and made politics irrelevant. The successful penetration of this ideology has resulted in the population’s rejection of its own ancient culture. Indians are as corrupt as Pakistanis, as nepotistic and as poor. Most Indians don’t like their politicians. However, they don’t have a crisis of the state and no need for a saviour like Imran. Why? Simple. India’s secular constitution is accepted by all its parties, right, centre and left. Even the BJP insists on secularism.
India has one of the world’s most bigoted societies, true. But it has outstanding laws and a constitution as good as if not better than any in Europe. The state is aligned correctly, the orientation is right. In such conditions, progress is possible and despair is held at bay."
http://www.odi.org/comment/6954-corruption-golden-thread-development-governance
"The first inconvenient truth is that corruption does not affect aggregate development performance as much as we might think. Here, the evidence suggests that what matters most is how corruption is managed and how it relates to different forms of political systems. More generally, the direct causal impact of corruption levels on economic growth and other development outcomes is difficult to prove.
Which leads us to the second, perhaps most important, inconvenient truth.
Corruption is a symptom of existing problems, not a cause of poverty or slow development. Typically these underlying issues are political in nature. They are related to lack of incentives, lack of programmatic (rather than patronage) politics and/or checks and balances on politicians who, faced with a choice, continue to protect their own interests and those of the elites who support them, in the absence of any good reason to do anything different.
The third inconvenient truth, related to the first two, is that various attempts to eliminate corruption have not worked all that well. Many things have been tried by development agencies over the past 20 years, including anti-corruption commissions, strengthening horizontal or vertical accountability mechanisms with more effective audits and greater citizen pressure. The results have been mixed, at best. So, we are still in search of ‘what works’ in the fight against corruption. "
http://swaminomics.org/corruption-and-economic-growth/
"Businessmen in surveyed countries said that the main problem with corruption was that it increased risks and uncertainties. These risks declined dramatically if corruption produced reliable outcomes (as in Indonesia). If all players had to pay 10% and could sure of getting their licences, (Madam Suharto was called Madam 10%), entrepreneurs’ could treat this as just one more tax, factor it into their calculations of returns, and so invest with confidence.
What they fear above all is
arbitrariness, where some entrepreneurs pay huge sums in vain while
others pay little or nothing and succeed. This happens when there is
much discretion in decision-making. It also happens when some decision
makers are corrupt and others not (as in India). There is saying in
India that we have honest politicians who take the money and do the
needful; dishonest politicians who take money and do not deliver; and
madmen who do not take money at all. In this lexicon, Suharto was both
honest and sane, and delivered. That mattered.
Worst of all is rapacity, where the
ruler extorts without giving anything in return. This seems to be the
sad story of Zaire and Nigeria.
Finally, the quality of institutions
seems to be very important. Where institutions work even moderately
well, progress is possible even if money is skimmed off at the top. But
if institutions are incapable of enforcing any rights, corruption will
hasten economic collapse."
http://www.globaldashboard.org/2012/03/09/is-corruption-one-word-or-many/
"In many countries, corruption actually is not viewed negatively but is seen as a positive force and reflects a value system that prioritizes loyalty to family and clan over that to an impersonal institution. In such places, it may be so important to maintaining stability and reinforcing the glue that holds together a state that eliminating it—which would be impossible in any case—would have dire consequences. As one writer on Pakistan commented, “Western language about ‘corruption’ in Pakistan suggests that it can and should be cut out of the political system; but in so far as the political system runs on patronage and kinship, and corruption is intertwined with patronage and kinship, to cut it out would mean gutting Pakistan’s society like a fish.”"
"In China, for instance, although corruption is deeply rooted and widespread, it does not necessarily determine the allocation of key resources in most cases. While it serves to reduce efficiency, increase costs, and can produce egregious results at times, given the low overall level of development in the country, it does not have a large effect on growth (though this will change as the country grows richer). On the contrary, it may actually act as a lubricant to circumvent stifling regulations and smooth the establishment of the trust necessary for businesspeople to have enough confidence in officials to want to invest at times."
"Some scholars consider the differing levels of public trust (i.e., the level of trust between strangers) the determining factor behind which type of corruption a country has. Others deem the deciding factor the degree to which a political elite can operate with a long-term horizon and can centralize economic rents."
"Countries would be far better off without corruption (and associated practices such as rent-seeking and neopatrimonialism) in the long term. But they should not always be seen as the primary barrier to progress at early stages of development. Instead, other problems—such as weak social cohesion or the lack of security for investments—are probably at work. Corruption is typically a symptom of a deeper malaise, not the cause of that malaise."
http://swaminomics.org/why-does-corrupt-india-grow-fast/
"An interesting point has been made about
corruption by Deena Khatkhate in his recent book Ruminations of a
Gadfly. He cites sociological studies to show that in non-corrupt
states like Denmark, people in a village hardly know one another, and
family ties are weak — members do not even regularly attend family
weddings. But people in an Indian village are in close contact with
neighbours, and have strong ties within families and communities.
People in authority will be much more corrupt in India, says Khatkhate,
since tradition approves the giving of priority to one’s family, caste
and religious group over abstract ideals like the public interest. But
in Denmark and other developed countries, public interest is viewed as
top priority, and this notion is facilitated by the lack of strong
family and social networks.
He also gives examples of Indians who
blossomed when they went abroad, but could not have achieved similar
success in Indian conditions, marred by cronyism, political
interference, and wooden bureaucratic rules. Lakshmi Mittal says that
if he tried to buy an existing steel plant in India, he would spend
half his life chasing netas and babus, whereas he could complete
takeovers abroad in a few months. Economists like Amartya Sen and
Jagdish Bhagwati, management gurus like CK Prahlad and Pankaj Ghemawat,
and astronomers like S Chandrashekhar all attained great heights
abroad, which they couldn’t have in India.
If corruption, political interference
and senseless rules in India make life so difficult, economic growth
should be slow. Investment and growth can be high only if property
rights are safe and contracts are honoured. If both are endangered by
corruption, then investment and growth should be low. But,
surprisingly, India has averaged almost 9% growth in the last four
years.
........
How do we explain this puzzle? First,
there are many sorts of corruption, and some are worse than others for
growth. In states where businessmen pay a hundred fixed, petty sums for
clearances, corruption can be no more onerous than a modest tax. In
some states, politicians want to maximise money to the exclusion of all
else, while in other places politicians want to facilitate industrial
growth even while making money. Businessmen say there are “honest”
politicians (and states) that will take money and deliver, while other
“dishonest” ones will take money and then not deliver."
http://swaminomics.org/china-beats-india-again-this-time-in-corruption/
"Wen Yunsong, nicknamed Winston, is the
son of Prime Minister Wen Jiabao. His China Satellite Communications
aims to become Asia’s largest satellite operator by 2015, with 15
satellites and annual revenues of $ 2.5 billion.
Educated in the US-like most
princelings-the young man established his first company, New Horizon
Capital, in the Cayman Islands, a tax haven. It raised over $ 2.5
billion from global giants like Deutsche Bank, JP MorganChase and UBS.
Would this be possible for any young Chinese entrepreneur unrelated to a
politician? Not a chance.
“Winston blatantly uses his political
background to get deals. If Winston is bidding for a deal, we wouldn’t
even try – we try to avoid competing with the big princelings.” So says a
top foreign investor.
The prime minister’s wife, Zhang Beili,
controls vast operations in jewellery and property. The Financial Times
cites a Wikileaks document as saying the lady and her children “get
things done for the right price”.
The relatives of Chinese President Hu
Jintao are powerful too. His son, Hu Haifeng, was once president of
state-owned Nutech which makes security scanners. After he took over,
the company was granted a virtual monopoly in this market. In 2008 he
moved up into Tsinghua Holdings, which controls 20 companies including
Nutech.
His sister is married to Daniel Mao.
This young man once headed Sina.com, one of China’s largest web portals.
His personal wealth was estimated in 2003 at $ 35-60 million.
An earlier Chinese President, Jiang
Zemin, has spawned millionaires too. In 2000, his son Jiang Mianheng
founded Grace Semiconductor, one of China’s first microchip companies,
partnering the son of Taiwan’s top tycoon. Today he heads Shanghai
Alliance Investment, an investment fund with stakes in major Chinese
companies.
Jiang Zemin’s grandson, Jiang Zhicheng, worked for Goldman Sachs in 2010. He now works at Boyu Capital Advisory."
http://tribune.com.pk/story/321518/imran-jinnah-and-pakistans-problem/
"Pakistan’s breaking up, 25 years after being formed, was not because of corruption. The decades of military rule and the rise of the jihadis are not because of nepotism. Pakistan’s economic condition is not the doing of black marketeers.
What are the problems then? To the outsider, it appears there is only one. The orientation of the Pakistani state is wrong. And it isn’t aligned correctly because of its ideology, whose prenatal trait is more pronounced each passing decade. This flaw produced the state’s resolve to defy India at all costs and the subsequent dominance of the army, which has led to the emasculation of its political parties and made politics irrelevant. The successful penetration of this ideology has resulted in the population’s rejection of its own ancient culture. Indians are as corrupt as Pakistanis, as nepotistic and as poor. Most Indians don’t like their politicians. However, they don’t have a crisis of the state and no need for a saviour like Imran. Why? Simple. India’s secular constitution is accepted by all its parties, right, centre and left. Even the BJP insists on secularism.
India has one of the world’s most bigoted societies, true. But it has outstanding laws and a constitution as good as if not better than any in Europe. The state is aligned correctly, the orientation is right. In such conditions, progress is possible and despair is held at bay."
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