Wall Street Journal
Corruption You Can Count On --- Crooked governments don't inevitably
kill an economy; Trouble emerges when the rules of the game are
Wall Street Journal
. (Eastern edition). New York, N.Y.: Apr 3, 2010. pg. W.3
[...] to the discomfort of development economists and anti-corruption crusaders, some of the great economic
success stories of the past half-century have taken place in the most corrupt economies on earth. How should a
dictator set the amount to extract from each company? A higher bribe brings in more cash, but also risks driving
the whole scheme out of business -- at some point the extortion payment gets so high that companies may simply
pack up and move elsewhere.
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In 1967, a young army general named Suharto became president of Indonesia, and ruled for the next three
decades with an iron fist. He presided over a notoriously corrupt bureaucracy that enriched Suharto's friends and
family. His wife was commonly known as Madame Ten Percent, playing off her name of Ibu Tien, and an indication
of her demands from profitable businesses. Yet in the midst of this endemic corruption, the country thrived
China took its turn in the corruption spotlight recently with admissions of bribe-taking by Rio Tinto executives on
trial in Shanghai. It was the second time in a week that corruption in China made headlines, along with Daimler's
admission of paying bribes to officials in 22 countries -- China included -- to secure government contracts. It would
seem that corruption in China, one of the fastest growing countries on the planet, is alive and well -- providing
another counterexample to conventional wisdom that corruption kills economic development.
Many countries that populate the lower rungs of Transparency International's annual corruption perception rankings
-- Myanmar, Zimbabwe, Haiti, to name a few -- are dismal economic failures. But to the discomfort of development
economists and anti-corruption crusaders, some of the great economic success stories of the past half-century
have taken place in the most corrupt economies on earth. In Transparency's first corruption ranking in 1995, the
two countries that ranked as the most corrupt were Indonesia and China. Yet these ratings came amid decades-
long economic booms. Indonesia grew at 6% per year under Suharto, and since the death of Mao Zedong in 1976,
the Chinese economy has grown at 9% annually, a rate unprecedented in modern history.
As far as economic development is concerned, apparently not all corruption is created equal. Volatile, unpredictable