Corruption, Governance and Security: Challenges for the Rich Countries and the World

1 Traditionally, national governance and corruption challenges have been seen as a) particularly daunting in the poorer countries, with the richer world viewed as example or benchmark, b) anchored within a legalistic framework and focused on the quality of formal institutions, c) a problem of the public sector, and d) divorced from global governance or security issues, which are regarded as separate fields. In this chapter we challenge these notions, by attempting to portray a more complex reality of mixed governance performance, not only in most of the emerging world but also among the richer countries of the Organization for Economic Cooperation and Development (OECD). 2 We suggest that the undue emphasis on narrow legalism has obscured more subtle yet costly manifestations of misgovernance, which afflict not only poor but rich countries as well.The traditional notion of corruption is challenged, and a broader framework of analysis is proposed. In particular, where the " rules of the game " have been captured by the elite, frequently ignored manifestations of so-called " legal corruption " may be more prevalent than illegal forms, such as outright bribery, which are the usual focus of attention. By scrutinizing the under-emphasized institution of " influence, " including vested interests, influence peddling, and outright capture by the elite, we arrive at some unconventional conclusions. Available data indicate clearly that ethics and corruption represent a challenge not only for many emerging economies, but also for many countries of the rich world. In fact, there is enormous variation of ethical standards within the rich world itself, more broadly defined to encompass forms of corruption that may not be strictly illegal, such as undue influence on public policy—through political funding or other means—by a few powerful interests. Probing the question of unequal and undue influence requires an examination of the role of the private sector, both domestic and transnational, and their interactions with public sectors, both at home and abroad. It is, therefore , important to study patterns of bribery, as practiced by firms operating abroad, in order to understand the interface between corporate governance by powerful transna-tionals and governance within the public sectors of emerging economies. Our analysis suggests that bribery abroad by transnationals headquartered in rich countries continues to be a serious issue in emerging markets. In order to assess the relative importance of legal and illegal forms of corruption, in which many in the corporate and public …