africa

Yale Center for the Study of Globalization
But there is a more interesting version of the claim that we pay too much attention
to African corruption: that we are holding developing countries today to a standard
that the developed countries never met when they were developing. Whether it is
the U.S. Foreign Corrupt Practices Act, the OECD Convention on Combating Bribery
of Public Officials in International Business Transactions, or other comparable
legislation, most early industrializers would not have passed muster.
These historical observations, while accurate, are beside the point. What went on
in Europe and North America in the 19th century should inform our thinking, but we
are living in a very different world today—one in which corruption presents developers
with distinctive challenges and costs.
For one thing, competition was much less intense during the 19th century than in
today’s world of open markets and capital that is as mobile as it is skittish. In the
United States, the combination of slave labor and unusually rich soil in the South
provided southern cotton with an advantage in world trade. The availability of new
land in the West created ample opportunities for geographic and economic expansion
that were nearly uninhibited by competition.
In Europe too, many large powers industrialized behind shields of imperial protection,
particularly in the second half of the 19th century. This insulated them from
the kinds of fierce economic competition rampant in today’s global markets, where
developing countries must often compete not only with one another but also with
developed countries. The competitive environment is tougher, and the deadweight
loss from corruption is more costly.
In the U.S., there was, indeed, little deadweight loss from corruption in the 19th
century. Most of what was skimmed off found its way back into the domestic economy.
The robber barons did not ship their ill-gotten gains to offshore bank accounts.
Today, the fruits of corruption in Africa often wind up in Cyprus, Switzerland, and
elsewhere. They fund lavish cosmopolitan lifestyles and investments all over the
globe. The externalities of African corruption are therefore almost all negative from
the perspective of African countries.
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