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188 Diagnosing Corruption in Ethiopia
will use other, possibly less effective, mechanisms or simply let conflicts
fester until they explode.
• Conflict resolution is a private good provided by the sector, but its
actions in this area create an important public good: the strengthening
of the normative framework guiding public and private actions
(Shavell 1997). Where the organizations are regarded as corrupt, this
rule-strengthening function will not occur (thus compromising the
rule of law).
• Finally, the rule-strengthening function contributes to another public
good: creation of a predictable environment for public and private
transactions (North 1990). Corruption undermines this predictability
or, at best, makes it a function of who can pay most or who has the
strongest political “godfathers.”
The jury is still out as to the importance of justice-sector quality to
attracting domestic and foreign investment (Hewko 2002; Jensen 2003;
La Porta and López-de-Silanes 1998; Sherwood, Shepherd, and Souza
1994; Stone, Levy, and Paredes 1996). Still, even if there are other
inducements (for example, market size or resource base) for investing in
a country with notoriously corrupt courts and police, investors take steps
to reduce their risks that also cut into overall productivity and thus into
competitiveness. 8 The same can be said for other systemic vices, most
notably egregious inefficiency, against which Ethiopia has made significant
strides, especially in civil justice.
Still more important, justice sector corruption reduces the quality of
life for a country’s citizens, leaving them defenseless in the face of abuses
committed by the sector’s members or by other private and public actors.
Hence, even if corruption is less directly economically harmful in the
justice sector than in others, it represents a significant threat to the citizenry’s
well-being, to the pace of economic and social development, and
to the returns on investment by public and private agencies (La Porta and
López-de-Silanes 1998; World Bank 2005, 2009).
Challenges to Identifying and Combating Corruption
Corruption in the justice sector is a universal phenomenon that no
country has completely eliminated. The underlying problem is the nature
of the services delivered and their dependence on myriad decisions at the
discretion of individual officials. Robert Klitgaard’s (1988) formula—C =
M + D − A (Corruption equals Monopoly plus Discretion minus
Accountability)—meets its match in this sector, which (a) by definition