Be Careful What You Wish for: Fighting Corruption Is Good, But Not If It Means Stopping Development Assistance

Senators Lugar and Bayh are again on the anticorruption warpath. Yesterday they issued a press release calling for "a Government Accounting Office (GAO) probe of the World Bank's anticorruption efforts." They want to make sure that the U.S.'s $950 million contribution to the International Development Association is not being "misspent and enriching corrupt foreign regimes." Certainly sounds reasonable, but is this really the right focus for a review of World Bank operations? In the chapter I wrote (along with Ted Moran) for The White House and the World: A Global Development Agenda for the Next U.S. President, a forthcoming CGD publication, I argue that it is not. I make three points in the chapter that bear on the Lugar-Bayh proposal.

• If the U.S. is to provide leadership on global anticorruption efforts, it has to get its own house in order. More taxpayer money has gone missing in Iraq and Afghanistan than the entire U.S. IDA contribution.
• The right focus in limiting corruption is on outcomes not processes. There is ample evidence that greater supervision budgets, more investigatory staff does little to limit corruption beyond tightly ringfenced donor projects.
• All countries, including the United States, have corruption problems. The challenge is to ensure that taxpayers get value for money. If we focus on making sure the road is built, built to specification and on time, and built at reasonable cost, we ensure the needed development outcome, and corruption becomes self-limiting.

If you don't share my concern that a focus on corruption above all else risks undermining development, consider the emerging story of infrastructure development in Africa. Everyone agrees that poor infrastructure is one of the greatest barriers to Africa's development. Yet, prodded by its critics, the World Bank has blackballed any and all construction firms found to have engaged in corrupt acts and listed them on a public website. Many of these are large, well-known multinational firms prominent in the construction sector. The immediate result of this campaign is that there are now very few firms "certified" to do World Bank construction projects in Africa, and even fewer willing to bid on anything related to infrastructure. Given Africa's urgent need for infrastructure, particularly in the energy sector, can this really be the outcome we want?There are many good people in the World Bank trying to foster development in some of the world's most difficult settings. If Bank staff, especially hard-pressed operations staff, are made personally responsible for protecting every dollar of development assistance, the system will simply freeze up. The great challenge for all of us, including the U.S., is to find ways of accelerating development in less-than-perfect environments. Put simply, if we want to be sure we don't lose a single dollar of U.S. taxpayer money to corruption, we should stay out of most of Paul Collier's bottom billion countries. If we think it more important to somehow make it less difficult for hard working and impoverished people in these fragile countries to improve their lives, then we need to keep our eye on the right ball: outcomes, not processes.