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Corruption Hurts Development But New Technologies Can Help

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Several high-level corruption cases in 2016 have brought corruption to the public's attention. Last month, the South Korean Parliament voted to impeach President Park Geun-hye for extorting millions from major Korean corporations. In Brazil, President Dilma Rousseff was impeached in August for the "carwash scandal" which included a network of government officials involved in money-laundering and corrupt procurement. Another South American female leader, former Argentinian President Cristina Fernández de Kirchner, was indicted in May for manipulating the nation's Central Bank during the final months of her administration. Over the past few months, South African President Jacob Zuma, nicknamed the "Teflon President" for his ability to survive scandals, has been facing pressure to resign because of misuse of public funds.

Even though high-level corruption is worthy of our attention, by focusing only on these cases one might fail to assess and address the impact of all forms of corruption on economic and social development. As in cases such as South Korea, grand corruption is committed at a high governmental level where leaders benefit at the expense of the public good by distorting the central functioning of the state. On the other hand, petty corruption is committed by low- and mid-level public officials in their everyday interactions with ordinary citizens and often takes place in hospitals, schools, police departments, and other government agencies. Petty corruption is often overlooked, even though it hinders access to basic goods affects economic development, and disproportionately affects the poor in public service delivery.

The vast majority of scholars and specialists support that corruption, which is strongly negatively correlated with sustainable growth, "sands" the wheels of development by making economic and political transitions difficult. In fact, most economists agree that corruption has a major negative impact on development and, by generating poverty traps, is one of the causes of low income.

Dr. Jillian Kohler, a Professor at the Munk School of Global Affairs at the University of Toronto, highlights the impact of corruption on global health. Dr. Kohler argues that corruption jeopardizes international security by compromising population health and that access to vaccines and medications could improve security. The global poor are most affected by problematic access to health as they often face the trilemma of choosing between purchasing from illegal sellers to reduce the cost, deepening their impoverishment by using private health systems, or not taking medications at all.

Dr. Kohler suggests that transparent electronic procurement system would improve the integrity and efficiency of the global pharmaceutical supply system, improve access to healthcare for the poor, and provide fewer opportunities for corruption.

University of Wisconsin-Madison economists Jeremy Foltz and Daniel Bromley examined petty corruption in West African trucking and its impact on delivering basic goods and on trade more broadly. They documented petty corruption between drivers and officials at regular checkpoints and barriers and they found that bribe payments are required in 90 per cent of the stops.

Drs. Foltz and Bromley argue that petty corruption reduces 1-2 per cent of trade, which in turn deters foreign direct investment, and creates captive markets where citizens either don't have access to or pay premium prices for goods such as food and medicine.

As the World Bank highlights in a report on corruption in Bank-financed projects, the negative impact of corruption on development is not only limited to financial damages but involves a broader chain of events, including raised prices and/or lowered quality due to bribery; qualified bidders who are discouraged and stop bidding as less qualified bidders win by bid rigging; and citizens who are unwilling to report corruption because of undermined trust in public institutions.

A powerful and innovative tool against petty corruption is the use of information technology (IT) either in the form of mobile applications or web platforms. IT and e-governance could be the antidote and have the potential to improve efficiency and transparency, remove the element of discretion that public officials have, help lower the cost of services, and assist in indicting public servants for corrupt activities. Also, the first stages of petty corruption in accessing services can be largely eliminated by introducing e-governance in accessing and filing forms and documents such as licences.

As part of the Asia Connect Initiative of the Asia Pacific Foundation of Canada - the foremost think-tank on Canada's relations with Asia - I am currently leading a team to produce a report on how new technologies can help tackle corruption. As the focus of the report is Indonesia, we have been able to talk to several local anti-corruption organizations and run a survey for university students. Indonesia is a particularly interesting case as it is the third largest democracy in the world, faces high corruption rates, and has multiple government and non-government initiatives collaborating with each other, often using new technologies.

Anti-corruption initiatives in Indonesia already use mobile apps to prevent corruption, facilitate the reporting of corrupt activities, educate and inform the public, and empower women to be anti-corruptions agents.

One of the new initiatives is Korupedia, an online tool built with the collaboration of the Anti-Corruption Commission (KPK), Transparency International Indonesia, and volunteers. Korupedia provides two services through their website: first, an online list of government officials who have been convicted for corruption and the documents associated with their trials and, second, information on cases that are stalled in a certain stage of legal proceeding . Users can see on the map each case and follow its history. This "naming and shaming" approach is believed to be effective for tackling future corruption as public servants will be more cautious. Additionally, the public can sometimes avoid services that are more corrupt, for example when choosing where to get a document or passport.

The interviews and survey conducted for our project showed the potential and challenges of the collaborative initiatives using new technologies. The concurrent use of top-down and bottom-up approaches through the collaboration of a government agency with high independence, such as KPK, and grassroots organizations give the opportunity for speedy results. Even though social media and other online tools look promising and have already delivered results, the low internet penetration of the country (20.4 per cent) and the slow internet connection keep their impact limited.

Petty corruption is often overlooked because it rarely creates news and is more frequent in poor countries, but it has serious effects on the local population and economy. It is often perceived as an opportunity for low-level bureaucrats to earn an extra income, when in reality it raises costs for citizens and hinders growth and poverty alleviation. The use of new technologies is promising as a way to assist in lowering the cost of services, improving access to goods, and reporting corruption, and ultimately help strengthen democratic institutions.