POS W 4435x POLITICAL CORRUPTION AND GOVERNANCE Fall 1999 407 International Affairs Bldg., Tu Th 1:10-2:25 Professor Xiaobo Lü  Class Website: http://www.columbia.edu/itc/barnard/polisci/lu/ Teaching Assistant: Amitabh Dubey Course Description and Objectives As one of the oldest and most perplexing phenomena in human society, political corruption exists in almost every country in the contemporary world. Social scientists and policy makers have long been baffled by the relationship between corruption and political and economic development and the question of how to successfully contain corruption. Conventional wisdom is that corruption harms rule of law, demoralizes the society, and inhibits economic growth. But it is more often assumed than tested and proven. Much has been written about political corruption. Yet many questions still remain. In this class, we will address five sets of broad questions that are most common in the discourse on corruption and governance: (1) Definition of Corruption: Is the concept of corruption universal? Is it possible to find a commonly accepted and applicable definition of corruption? Should there be a universal standard of "good governance"? (2) Causes of Corruption: What are the possible causes of political corruption in general? What are the causes of corruption in different of types of regimes? Is there a general theory of corruption? (3) Patterns of Corruption: What are the various patterns of political corruption in countries of different political and economic development? How does it occur? In what form? (4) Consequences of Corruption: How does corruption affect social and economic development? Why has corruption inhibited economic growth and democratization in some countries but not others? Can corruption be "efficient" and "positive"? (5) Control of Corruption: Can corruption be controlled? If so, how? What are the most effective ways to reduce, contain, and eliminate corruption? A course on comparative political corruption is both relevant to the field of comparative politics and public policy, and is therefore suitable for a wide-range of graduate and undergraduate (upper division) students in political science, public policy, international affairs, business (international business ethics), and law (white-collar crimes). As a comparative politics survey, it will introduce students to several key social science debates on the causes and effects of political corruption. Through on-going discussions about whether corruption hurts economic development and political stability, this class will provide a better understanding of the impact of corruption on bureaucracy, the economy, and society at large. A scholarly assessment for mapping out strategies and codes of conduct to control corruption will be made. There is a website for this class posted in the Directory of Class page of the Columbia University website (http://www.columbia.edu/itc/barnard/polisci/lu/). Some of the readings are online and your are advised to logon to the site as often as possible. Requirements and Grades During the course of this class, the instructor will survey the field of corruption studies in various academic disciplines such as political science, sociology, economics, and law. Although lecture is the main form of instruction, students will be expected to participate in class discussions and fulfill weekly reading assignments. Attendance at all lectures is a must. Students are also encouraged to read some additional print and Internet material as part of their research projects. There will be three kinds of reading materials: books, articles (either in a reader or loose files), and web sites. Prerequisites: Open to both graduate and undergraduate students. Sophomore standing is required. A prior introductory course in comparative politics is recommended. Grades are based on: 1. A short paper on topics assigned by the instructor (5-7 pages in length, 30% of the course grade, due on October 21). 2. A mid-term paper on topics that have been covered in class (8-10 pages in length, 30% of the course grade, due on November 23). 3. For graduate students, a research paper of any topics related to the course (15-20 pages, 40% of the course grade, due on December 17). For undergraduates, a final exam (40% of the course grade, date to be announced). Undergraduates may also choose to write a research paper instead with the consent of the instructor. All late papers will be penalized (1/3 of a grade per day). Required readings (books to purchase): Heidenheimer, Arnold, Michael Johnston and Victor LeVine. eds. 1989. Political Corruption: A Handbook. New Brunswick, NJ: Transaction Publishers. Rose-Ackerman, Susan. 1999. Corruption and Government, New York: Cambridge University Press. Klitgaard, Robert. 1988. Controlling Corruption. Berkeley and Los Angeles: University of California Press. Theobald, Robin. 1990. Corruption, Development and Underdevelopment. Durham: Duke University Press. Required readings online: UNDP, Corruption and Integrity Improvement in Developing Countries, at http://magnet.undp.org/Docs/efa/corruption.htm Recommended readings (will be on reserve in the Lehman Library): Elliot, Kimberly Ann. ed. 1997. Corruption and the Global Economy. Washington, DC, Institute of International Economy. Rose-Ackerman, Susan. 1978. Corruption: A Study in Political Economy. New York: Academic Press. Scott, James. 1972. Comparative Political Corruption. Englewood Cliff, NJ: Prentice-Hall Inc. Clarke, Michael. ed., 1983. Corruption: Causes, Consequences and Control. London: Frances Pinter, Ltd. Noonan, John. 1984. Bribes. New York: Macmillan. Huntington, Samuel. 1968. Political Order in Changing Societies. New Haven and London: Yale University Press. All required and recommended books are on reserve at the Lehman and Butler Libraries. Some of the articles that are not available online are also on reserve at the Lehman Library. Useful Web Links: http://www1.gwdg.de/~uwvw/welcome.htm(Internet Center for Corruption Studies) http://www.oecd.org/daf/cmis/bribery/annex3.htm (OECD anticorruption studies) http://www.icac.org.hk/ (Independent Commission Against Corruption, Hong Kong) http://www.transparency.de/ (Transparency International) http://www.transparency-usa.org/link.html (Transparency International US Chapter) https://wwwc.cc.columbia.edu/sec/dlc/ciao/wps_a-i.html (This is a hub for links to working papers at major international affairs centers) http://www.wto.org/wto/govt/working.htm (World Trade Organization) A bibliography on corruption (mostly economics literature): http://wbln0018.worldbank.org/prm/premhome.nsf/9af1d8ac9171a5b48525668e0063ebc7/20eee956dc8823188525668e006610f3 (In case you can’t open this file, go to the Worldbank site and search for "Coolidge") International Organizations (http://www.library.nwu.edu/govpub/resource/internat/igo.html) Development Links (http://www.aib-world.org/development.shtml) World Political Information (http://www.agora.stm.it/politic/) Russia Today (http://www.russiatoday.com/) I. Conception, Perception, and Definition Week One (9/7-9/9): What is Corruption? Why Study It? 1. Introduction to the class 2. Definitions of corruption a. Public-interest-centered definitions. b. Market-centered definitions. c. Public-office-centered definitions. 3. Whose Corruption? Electoral corruption (political corruption) vs. bureaucratic corruption. Readings: Nye, Joseph. 1967. "Corruption and Political Development: A Cost-Benefit Analysis" American Political Science Review 61 (2) 417-27. [Available online at the class website] Heidenheimer, Handbook, pp. 3-66. Theobald, Corruption, Development, and Underdevelopment, pp.1-18. Transparency International, Corruption Perception Index (1998), http://www.transparency.de/documents/cpi/index.html [Available online at the class website] Week Two (9/14-9/16): Corruption Perception and Historical Evolution How is corruption perceived in different societies and at different times? Is there a universal standard for defining what is corrupt? a. Universalist: There are two main schools of thought on how corruption should be conceptualized. The first is what can be called "universalist," which seeks to define corruption using certain common properties with the premise that these properties make certain behavior "corrupt" in all societies. b. Relativist: This view contends that what is corrupt in one society may not be in another. The definition of corruption depends on the country and culture in question. Most contemporary scholars on corruption agree, though, that a working definition of corruption which can be applied to corruption across country boundaries should be, and indeed is, possible. c. The evolving perception (conception) of corruption. Readings: Heidenheimer, pp. 66-143; 719-800. Theobald, pp. 1-18. Philp, Mark, 1989, "From ‘Asabiya’ to Moral Aptitude," unpublished manuscript. II. Explaining Corruption Week Three (9/21-9/23): Institutions and Corruption Mainly historical-sociological approach to explaining causes of corruption. (1) One theory views corruption as induced by bureaucratization, or by permanent bureaucratic inertia. The former is most often found in case studies of Britain, the United States, and other capitalist industrialized countries. In these societies, corruption is viewed as a shift from the impersonal logic of the market to bureaucratic impersonalism. (2) The other takes an opposite position, that corruption is a consequence of "mal-administration," of the lack of an impersonal and universalistic bureaucratic system. Readings: Theobald, Corruption, Development, and Underdevelopment, pp.19-106. Heidenheimer, pp. 145-210. Caiden, Gerald E. 1988. "Toward a General Theory of Official Corruption." Asian Journal of Public Administration 10 (1): 3-26. Caiden, Gerald, and Naomi Caiden. 1977. "Administrative Corruption." Public Administration Review 37: 301-9. Rajkumar, Renuka. 1976. "Political Corruption: a Review of the Literature." West African Journal of Sociology and Political Science 1 (2): 177-185. Week Four (9/28-9/30): Market and Corruption Economic approach to explaining corruption, which is based on the rational choice assumptions. (1) Micro-economic approach: Scholars search for economic reasons accentuated by the rational calculation of people involved in corrupt transactions. E.g. game theoretical model on "transaction costs" and the principle-agent model. (2) Macro-economic approach: This mode of reasoning claims essentially that the lack of economic development and the presence of restrictive government intervention are the main structural factors for corruption. Corruption is seen primarily as a consequence of scarcity, artificially created by government desire to promote economic growth. Models of this approach include the rent-seeking theory and the "second economy" theory. Readings: Klitgaard, pp.52-97. Rose-Ackerman, pp. 1-25. Krueger, Ann. 1974. "The Political Economy of the Rent-Seeking Societies." American Economic Review 64 (3): 291-303. [Available online at the class website] MacRae, John. 1982. "Underdevelopment and the Economics of Corruption: A Game Theory Approach." World Development 10 (8): 677-687. Kiser, Edgar, and Xiaoxi Tong. 1992. "Determinants of the Amount and Type of Corruption in State Fiscal Bureaucracies: An Analysis of Late Imperial China." Comparative Political Studies 25 (3): 300-331. Philp, Mark. 1989. "From `Asabiya' to Moral Aptitude: A Case Study in the Definition of Political Corruption." Unpublished manuscript. Laurence Busse, at al., 1996. "The Perception of Corruption: A Market Discipline Approach" at http://userwww.service.emory.edu/~tyavero/ip/project2.html Week Five (10/5-10/7): Culture and Corruption (1) The socio-structural approach. The analytical focus of this approach, influenced by Fred Riggs’ ecological treatment of public administration, is generally the socio-cultural milieu of corruption. It pays attention to values, ethos, and "cultures of corruption." Analytical unit: society and culture. (2) The psychological and attitudinal approach examines individual attitude or social norms for reasons of corruption. Analytical unit: individuals Readings: Heidenheimer, pp. 305-73; 375-88; 423-442. McMullan, M. 1961. "A Theory of Corruption." The Sociological Review 9:181-200. Klugman, Jeffry. 1986. "The Psychology of Soviet Corruption, Undiscipline, and Resistance to Reform." Political Psychology 7 (1): 67-82. Roldan, Antonio 1989. "A Brief Psychology of Corruption." Psychology 26 (4): 53-55. Sampson, Steven. 1983. "Bureaucracy and Corruption as Anthropological Problems: A Case Study from Romania." Folk 25: 64-96. III. Patterns of Corruption Week Six (10/12-10/14): Corruption in Developing Countries (1) Personal rule and corruption (2) Crony-capitalism (3) Prebendalism and rent-seeking Readings: Weyland, Kurt. 1998. "The Politics of Corruption in Latin America." Journal of Democracy (9) 108-21. [Available online at the class website] The Center for Institutional Reform and the Informal Sector (IRIS), 1996. "Governance and the Economy in Africa: Tools for Analysis and Reform of Corruption," at http://www.inform.umd.edu:8080/iris/toolkit.html Harsch, Ernest. 1993. "Accumulators and Democrats: Challenging State Corruption in Africa." The Journal of Modern African Studies, 31 (1): 31-48. Jones, Edwin. 1985. "Politics, Bureaucratic Corruption, and Maladministration in the Third World: Some Commonwealth Caribbean Considerations." International Review of Administration Science 1:19-23. J. Coolidge and S. Rose-Ackerman, 1997, "High Level Rent Seeking and Corruption in African Regimes" Worldbank Working Paper No. 1780. (http://www.worldbank.org/html/dec/Publications/Workpapers/wps1780-abstract.html) The chapters on Brazil and Mexico in Water Little, Political Corruption on Europe and Latin America (St Martin’s, 1996). [This book is on reserve]. Paper topics will be given on October 14 in class for the first paper. Week Seven (10/19-10/21): Corruption in Transition Economies (Former Communist Countries) (1) Informal relations and modes of operation. (2) Privatization of the state. (3) Rent-seeking in the emerging markets. (4) Organized crime and corruption. Readings: Miller, William, et al. 1998. "Are the People Victims or Accomplices: the Use of Presents and Bribes to Influence Officials in Eastern Europe," Crime, Law, and Social Change, 29 (4): 273-310. Kramer, John. 1998. "The Politics of Corruption," Current History, 97 (Oct.): 329. Kaminski, Antoni. 1989. "Coercion, Corruption, and Reform: State and Society in the Soviet-type Socialist Regimes." Journal of Theoretical Politics 1 (1): 77-101. Tarkowski, Jacek. 1990. "Endowment of Nomenclature, or Apparatchiks Turned into Entrepreneurchiks, or from Communist Rank to Capitalist riches." Innovation 4 (1): 89-105. White, Gordon. 1996. "Corruption and Market Reform in China." IDS Bulletin, 27 (2): 40-47. FBI, "Corruption in Russia" (http://www.usia.gov/topical/econ/bribes/fbi0910.htm) The first paper is due on October 21, in class. Week Eight (10/26-10/28): Democracy and Corruption (1) Political scandals and electoral politics (2) Public contracts and rent-seeking Readings: Heidenheimer, pp. 535-586; 587-638; 871-932. Theobald, pp. 46-75. Rose-Ackerman, pp. 127-142. Colazingari, Silvia, and Susan Rose-Ackerman, 1998. "Corruption in a Paternalistic Democracy: Lessons for Latin American Countries," Political Science Quarterly, 113: 447-70. Johnson, Chalmers. "Tanaka Kakuei, Structural Corruption, and the Advent of Machine Politics in Japan." Journal of Japanese Studies 12, no. 1 (1986): 1-28. Week Nine (11/4): Case Studies: Political Corruption in Different Types of Regime (November 2 is an election holiday, no class) 1. Mexico 2. China Readings: Gong, Ting. 1993. "Corruption and Reform in China: An Analysis of Unintended Consequences." Crime, Law, and Social Change 19 (6): 311-327. Xiaobo Lü, "Booty Socialism, Bureau-preneurs, and the State in Transition: Organizational Corruption in China," Comparative Politics, forthcoming. Johnston, Michael, and Yufan Hao. 1995 "China's Surge of Corruption." Journal of Democracy 6 (4): 80-94. [Available online at the class website] Klaus M. Leisinger, 1996. "Multinational Corporations, Governance Deficits, and Corruption: Discussing a Complex Issue from the Perspective of Business Ethics," at http://foundation.novartis.com/corrupt.htm IV. Consequences of Corruption Week Ten (11/9-11/11): Political Consequences of Corruption The debate on corruption effects: (1) Corruption is demoralizing and unfair. It creates public distrust in government and leads to instability. It is a cancer of a polity. (2) Corruption buys off officials who would otherwise have resisted reform, thus reducing the possibility of stagnation. It provides access to government and policy-making process for people who would otherwise have had no such access. Readings: Heidenheimer, pp. 933-1006. Rose-Ackerman, pp.113-74. Theobald, pp. 107-130. Ben Dor, Gabriel. 1974. "Corruption, Institutionalization, and Political Development: the Revisionist Theses Revisited." Comparative Political Studies 7 (1): 63-83. Waterbury, John. 1976. "Corruption, Political Stability and Development: Comparative Evidence from Egypt and Morocco." Government and Opposition 11 (4): 426-445. Abueva, Jose. 1966. "The Contribution of Nepotism, Spoils, and Graft to Political Development" East-West Center Reviews 3: 45-54. Week Eleven (11/16-11/18): Economic Consequences of Corruption The debate on the economic effects of corruption: (1) Corruption is a form of rent-seeking, which is unproductive and socially wasteful. It distorts the market and discourages investors because of added transaction costs. (2) Corruption is an equalizer. Under certain conditions it does not hamper overall economic growth. It may actually enliven economic activities in an otherwise stagnate and highly regulated economy. The economic crisis in Asia in 1997 also prompted some to argue that "crony-capitalism" was to blame for causing the crisis. We will assess such arguments. Readings: Heidenheimer, pp. 389-404. Rose-Ackerman, pp. 7-26. Mauro, Paulo, 1998, A Corruption: Causes, Consequences, and Agenda for Further Research," Finance and Development, 35 (March). [Available online at the class website] Kaufmann, Daniel and Cheryl Grey, "Corruption and Development," Finance and Development, 35 (March). [Available online at the class website] Basu, Susanto, and David Li, 1998 "Corruption in Transition," unpublished paper. Johnston, Michael, 1997, "The Vice—and virtues—of Corruption," Current History, September. Week Twelve (11/23): Case Studies: Corruption and Development Crony Capitalism and the "Asian Miracle" 2. Kleptocracy and Underdevelopment in Africa Readings: Klitgaard, pp. 52-97. Hutchcroft, Paul, 1996, "Corruption’s Obstruction: Assessing the Impact of Rents, Corruption, Capitalist Development in the Philippines," unpublished paper. MacIntyre, Andrew, 1996, "Clientelism and Economic Growth: the Politics of Economic Policy Making in Indonesia," unpublished paper. The second paper is due on November 23, in class. V. Corruption as a Public Policy and Business Ethics Issue Week Thirteen (11/30-12/1): Corruption Watch: How to Control It? (1) Anti-corruption institutions, strategies, and other efforts. (2) Case Study: The ICEC (Hong Kong) story Readings: Klitgaard, pp. 98-210. Heidenheimer, pp. 801-70. Theobald, pp. 133-161. Rose-Ackerman, pp. 143-74. Klitgaard, Robert, "International Cooperation against Corruption," Finance and Development, 35 (March) 1998. [Available online at the class website] Quah, Jon. 1995. "Controlling Corruption in City-States: A Comparative Study of Hong Kong and Singapore" Crime, Law, and Social Change, 22: 391-44. Web sites: Independent Commission Against Corruption, Hong Kong SRC: http://www.icac.org.hk/ Transparency International: http://www.transparency.de/ Week Fourteen (12/7-12/9): International Business Ethics and Good Governance International anti-corruption efforts (guest lecture by a UNDP representative). Readings: Heidenhiemer, pp. 685-700. Rose-Ackerman, pp. 175-222. Klaus M. Leisinger, 1994. "Corporate Ethics and International Business: Some Basic Issues," at http://foundation.novartis.com/business_corporate_ethics.htm OECD Anti-Corruption Center: http://www.oecd.org/daf/nocorruption/index.htm US Dept of Commerce Report on OECD Antibribery Convention: http://www.mac.doc.gov/TCC/BRIBERY/oecd_report/ http://www.oecd.org//puma/sigmaweb/ethics/KLITGARD.HTM http://www.oecd.org//puma/gvrnance/ethics/symposium/rose.htm http://www.oecd.org//puma/gvrnance/ethics/symposium/corruption.htm http://www.oecd.org//dev/news/corrupt.htm http://www.oecd.org//daf/cmis/bribery/secgene.htm gopher://gopher.un.org/00/ga/recs/52/RES52-87.EN (2) US laws: the Foreign Corrupt Practices Act (FCPA) of 1977 (http://www.usdoj.gov/criminal/fraud/fcpa/fcpa.html) and the International Anti-Bribery and Fair Competition Act of 1998. Readings: Victor, Kirk. 1996. "Dirty Dealings," National Journal, (28): 869-73. Bill Clinton on FCPA, (http://www.usdoj.gov/criminal/fraud/fcpa/signing.htm) US Dept. of Justice, "A Guide to FCPA" (http://www.usdoj.gov/criminal/fraud/fcpa/dojdocb.htm) http://www.tht.com/ClientBulletinForeignCorruptPracticesAct.htm http://www.imdr.com/publish/corrupt.htm http://www.pipermar.com/article40.html The final paper is due by 5:00pm on December 17 in instructor’s boxes (9th floor IAB or 4th floor Lehman Hall)