Letter: Does corruption hamper development?
Corruption is certainly bad and one of the banes of development. But sometimes, the way of illicit money is spent can make a difference. Experts have argued that Indonesia is luckier than a number of African countries regarding the impacts of corruption, because Indonesian corruptors invest or spend their money in the country, whereas African corruptors put their money abroad.
Money, regardless where it comes from, can simply move the economy. When the corruptors build or buy new houses, then the carpenters, masons, plumbers and so forth get jobs. So do the restaurants, amusement parks, shops they frequent. The economy can grow along with corruption. At the very least, domestic consumption expands.
Some may dispute the idea that corruption results in bad governmental policies and their implementation. It makes sense, but sometimes evidence shows it does not matter. India is a case in point. India ranked 95th in the Corruption Perceptions Index (CPI) produced by Transparency International, slightly better than Indonesia at 100th. The joke that India’s economy only grows at night when the government is asleep hints at the fact that India’s growth takes place in an environment of limited government intervention.
Likewise, China is not so perfect as an example of good and clean government, yet China is ranked 32nd on the CPI. In his recent Project Syndicate article on the myth of Chinese meritocracy, Minxin Pei, a professor of government at Claremont McKenna College, reveals that nowadays many Chinese apparatchiks acquired their positions through cheating, corruption, patronage and manipulation.
So what should be learned from China’s and India’s economic success despite deep-seated corruption and schlock bureaucrats?
First, we should acknowledge that although Indonesia’s economic growth rate is relatively high, its economy does not have impressive a standout feature. India’s rapid growth is attributed to the burgeoning Bangalore IT industry, call centers and high-tech products. China’s growth is attributed to economic zones and the imitation of products made by private and state-owned enterprises. Indonesia has none of those. Adding value to raw materials through innovation is rare. Our main economic is driven by exploitation of natural resources.
In my opinion, China’s and India’s success hinges on the clear development visions forwarded by their leaders. Chinese development is the materialization of Deng Xiaoping’s vision whereas India’s is that of Manmohan Singh. Both cut a swath through many problems besetting their country, including corruption. But neither of them succeed in totally eradicating corruption.
Vision made a different and saved those countries. Coincidentally, China and India implemented planned economies for decades and those failed. And both reversed directions, turning toward open economies, emancipated their productive forces and both are now growing by leaps and bounds.
It reminds us that once Indonesian development had a vision. It was when former president Soeharto was in charge. Agricultural development and strategic industries are just a few examples. In the reform era, not to mince words, I do not know where Indonesia’s development is heading.