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Unformatted text preview: Lecture 10: Corruption; the Washington Consensus; the World Bank Introduction. I ended last time with a discussion of what it takes for a developing country to attract FDI, especially in competition with other developing countries that want it. The things it takes include physical infrastructure, an educated work force, and a predictable economic, legal and political climate. One of the factors included in legal predictability is the absence of corruption, being able to know how soon it will take to get a project done and how much it will cost on the one hand, versus getting the project held up by one official after another while bribe amounts are negotiated. So lets look at corruption. Where corruption is and isnt . Reading 9.2 comes from an NGO based in Germany called Transparency International that reports on the extent of corruption around the world. The index is compiled by combining the results of several surveys of people doing business in countries all over the world. I think there are sixteen surveys in all, though not every country is covered in every survey. One thing to look for is not the general run of things but the anomalies, both within regions and over time. As in the case of FDI, for example the huge divergence between inward and outward FDI in Japan, these anomalies reflect the particular histories of the countries under discussion. If European countries generally get fairly good rankings and Ireland is in 17 th place, thats not news. But if you find Greece in 56 th place, that is news, and if Montenegro is 84 th thats definitely news. You can more or less count on it that Montenegro is not the greatest place to invest money, and whats more, you can bet that Montenegro may not do that well in the years ahead. The same thing works in the other direction. Southeast Asia is not exactly the most corruption-free part of the world, as I indicated last time. Thailand is in 84 th place, but its actually doing better that most of the rest of the region, with Vietnam at 123 rd , the Philippines at 131 st , Indonesia in 143 rd , Cambodia in 162 nd , Laos in 168 th and Myanmar in 179 th . So with a region like this, its really eye-popping that one Southeast Asian country, Singapore, is practically at the top of the list, in fourth place. Theres a story behind this, as you can imagine....
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This note was uploaded on 10/15/2008 for the course GEOG 20 taught by Professor Acker during the Spring '08 term at University of California, Berkeley.
- Spring '08