reading # 23

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Databases selected: Wall Street Journal Full Text (1948 words) Corruption You Can Count On --- Crooked governments don't inevitably kill an economy; Trouble emerges when the rules of the game are unpredictable Raymond Fisman . Wall Street Journal . (Eastern edition). New York, N.Y.: Apr 3, 2010. pg. W.3 Abstract (Summary) [...] 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. (c) 2010 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission. 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 economically. 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
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