23 Mar 2015
Numerous Latin American countries suffer from considerable amounts of corruption. With the media reporting on corruption cases in Latin America on a frequent basis, the region has a reputation for being a high risk compliance environment. Indeed, scandals and public protests against corrupt leaders have long characterized the region. Corruption also has a strong root in the community and society as a whole. It is common people in Latin America to bribe a tax supervisor to avoid inspections, bribe a law officer if a violation has been committed, and numerous other possibilities. However, in spite of this pattern, till recently, corruption has gathered political and scholarly attention over the years. Ever since the late 90s, amid growing disillusionment over the slow advances of neoliberal and democratic economic reforms, the issues of governance, transparency and corruption have taken center stage. It seems like corruption has become the frequent denominator helping to clarify everything from Latin America's slow growth and persistent inequality to democratic stagnation. In this paper, I will provide an in-depth investigation of government and corruption in Latin America related to international economics.
The words 'Latin America politics' repeatedly elicit the rejoinder 'corruption. Rampant corruption is viewed as one of the most vital threats to deepening democratization and it remains a severe structural problem that detrimentally affects the region's democratic and economic development and also places a huge burden on the citizens. In the Latin American society, corruption is heavily rooted and this means that any significant modification shall come in the shape of a change in the view of impunity of the privileged corrupt acts. In Latin America, corruption is common, however measuring its extent is naturally challenging since the incidence of corruption varies from nation to nation, ranging from normal to common to systemic.
International donors strongly feel that corruption is a challenge to economic and political stability, and prevents public services from reaching many. Latin America in recent times has provided numerous examples of suspected high level corruption, apart from the more rampant daily corruption. For instance:
In 2003, Arnolodo Aleman, former Nicaraguan President was sentenced to twenty years in prison for corruption. He was found guilty of fraud, money laundering, electoral crimes and embezzlement.
In 2004, Brazilian President Luis de Silva was forced to let off a close government adviser after corruption allegations.
In 2004, a governor in Argentine was accused of abuse of power, murder and corruption.
These are examples which contribute to the discernment that corruption in Latin America is persistent. Whereas no nation is immune to corruption, there is a difference between 'normal corruption' a condition that is not common and can be controlled by anti-corruption apparatus and 'systematic corruption' where corruption is rampant and the apparatus for combating and restraining corruption is ineffective ( ). In most countries in Latin America, the latter seems to be the case.
Even though there is substantial variation in the scale of corruption from nation to nation, there is escalating consensus among donors, practitioners and scholars that corruption amounts to a central challenge to economic and social development as well as democracy. Currently, corruption is viewed as a cause of underdevelopment and cause of poverty and as a result of weak governance.
In the last decade, the global donor community has placed more emphasis on the need to combat corruption as a significant part of their lending strategies and development agenda. The escalating consciousness of corruption has influenced the rhetoric of leaders in this region, even when their pledge to confront this issue remains debatable. Unlike before, it is usual today for election candidates in Latin America to include anti-corruption strategies and slogans in their campaigns. Some candidates have won election simply by promising the masses to fight corruption. Additionally, NGOs, civil society organizations and the media have been more active in lobbying for reforms, promoting transparency and informing citizens.
In contrast to decades ago, when corruption was significantly viewed as a cultural trait which could only be solved through long term ethics and educational campaigns, presently, a mounting consensus is materializing that corruption is as much a result of a cogent behavior which responds to incentives ( ). As such, corruption thrives where the opportunities for this behavior are high, the consequences for illegal behavior are low and the likelihood of being caught is small.
( ) affirms that even though it is challenging to take a broad view of corruption in Latin America, the nations around this region share some elements which are identified to give rise to this problem. These include:
Overlapping responsibilities of different government agencies, cumbersome legislation and legal confusion which all contribute to boost the unrestricted power of public officials. This creates needlessly large bureaucratic barriers that can serve to proliferate opportunities for bribes.
Civil service in transition. Despite of reform and legislation, the public sector remains extremely vulnerable to peddling. And whilst some progress has made, there is a need to further toughen the civil service to make it more transparent, efficient, and accountable and to reduce incentives for corruption and abuse of power.
Excessive and complex bureaucratic regulations and procedures to obtain licenses, permits and registration. In many countries in this region, domestic and foreign investors, the business community and citizens face an unsolvable wall of rules, which hinder them from legally implementing economic and social activities. In most Latin America countries, it is very hard to obtain legal documents such as construction licenses, import and export permits, birth certificates, identification cards, acquire legal housing, pay taxes, obtain credit, enter into formal business agreements and find legal jobs ( ). Excessive and complex bureaucratic regulations and procedures promote corruption and unfavorably affect prospective business development, especially medium and small businesses.
Ineffective legislatures especially in supervising the executive branch of government. Many legislatures in Latin America are theoretically weaker than the executive branch and so, incapable of exerting their oversight functions efficiently. For instance, legislatures are normally incapable of effectively debating budget issues and budget formulation is frequently flawed by ambiguity between the legislative and executive roles. Therefore, the approval and preparation of the budget as well as the supervision and oversight of public spending is negatively affected resulting in the corrupt use of public funds.
Lack of voice, poor articulation and weak social controls. Even although in the past, the number of civil society organizations in the field of transparency have grown, most of their endeavors have concentrated on corruption awareness raising activities, less so in generating more pressure to prosecute corrupt leaders, forming coalitions and in effectively establishing social auditing activities ( ). Civil society organizations networks, at the regional and national levels remain fragmented; have limited capacity to translate advocacy activities into broad coalition building strategies for change, and lack suitable technical ability to analyze and process information released by government. In addition to this, in some situations, political and governmental interests have captured most of these organizations, in effect defusing their ability to voice critical and dissenting opinions.
Dysfunctional judicial systems that are not independent and are inefficient. In spite of judicial reforms that is, re-training of judges, penal codes, and the creation of oversight institutions, the judicial systems in most countries in Latin America do not sanction and prosecute corrupt officials. Money can buy complimentary court decisions, judges still hold on to enormous discretion, there are limited resources and training, and cases are delayed or lost. Systems appear to be overpowered and citizens, especially the poor are discouraged from using them. What is more, the judiciary in most countries in the region is unable to effectively apply criminal law, therefore, leading to impunity. Also, systems do not protect property and civil rights, thus weakening the rule of law and negatively affecting possible economic activity.
Lack of political will to control corruption. International groups, donors and practitioners in general agree that political will is needed to establish and maintain anti-corruption reforms. Even while election candidates currently pledge to fight corruption, once in office, only few are able to follow up their promises. Furthermore, maintaining political will has proven challenging for most leaders.
More awareness about corruption but mixed attitudes about it. ( ) states that public attitudes on Latin America about corruption remain in some way misleading. On one hand, although people in this region perceive that corruption is rampant, corruption is not recognized as the most critical issue. On the other hand, perception about corruption as a problem exists, even though only less than people in Latin America believe that there has been improvement in reducing corruption. Such perceptions imply that most citizens in countries in Latin America still do not associate corruption to the wide ability of governments to promote job opportunities and economic growth as well as deliver social services; economic ambiguities are simply too great. This to an extent explains why lenience for corruption still relatively remains high in Latin America.
In Latin America, the incidence of corruption varies from nation to nation, and ranges from common to widespread to systemic. If it is common, it might be somewhat easy to recognize the issue, authorize and close the opportunities which allow corruption to happen. However, once it is rampant and becomes systemic, the probability of discovery and sanction decreases and incentive are generated for corruption to further increase ( ). Besides, where there is systemic corruption, the rules, institutions, and norms of behavior have already been acclimatized to a corrupt environment, with employees, officials and other actors in the public sector frequently following the examples. Corruption can be very detrimental to the stability of democratic organizations or institutions, corrosive to competitiveness and economic growth and erosive to the rule of law ( ).
In governance in most countries in Latin America, some of the costs of systemic corruption are starting to materialize. Following the return of democracy in this region after more than two decades, most Latin Americans are losing support for their democratic institutions and governments. ( ) state that democracy in Latin America has not been able to take root due to the fact that it has significantly failed to tackle long-term problems related to corruption, inequality and poverty.
Also, a majority of governments in Latin America have paused in their efforts to move to true democracy. One of the most vital institutions of democratic governments, political parties are losing integrity because they have failed in articulating, representing, aggregating, and becoming liable to their voters. Most Latin Americans believe that parties are unresponsive, and aloof to their daily needs and concerns, a key part of the corruption issue. Additionally, Latin American leaders with authorization to respond to the concerns of citizens are overpowered with mounting and unsatisfied demands and deal with an unstable combination of distrustful populations and weak institutions. Besides, there is a surfacing consensus in Latin America that governments are experienced rampant corruption.
The costs of systemic corruption are starting to be dimensioned in the economic arena. According to ( ), reports on the social and economic costs of corruption reveal that systemic corruption can impede foreign and domestic investment, distort the magnitude of the composition of government expenses, restrict trade, strengthen the informal economy and weaken the financial system. In turn, this negatively affects income inequality and levels of poverty. However, unraveling corruption can help divulge variation across the region with regard to the extent of systemic corruption and its effects.
A major element which seems to highlight the correlation between competitiveness and corruption is the quality of public institutions. For instance, bureaucratic regulations and controls in relation to starting new business in Argentina and Brazil is a significant factor for a suitable business environment. ( ) says that business owners identify this as a significant weakness in Latin America. There are so many procedures to be followed in order to start a new business than in other countries and the time to finish procedures is longer. And if one adds to the bureaucratic weight, the rigorous paucities found in the judiciary system, it is evident that some of the crucial hurdles to competitiveness in most countries in Latin America are related directly to ineffective and inefficient public institutions, which in numerous cases, miserably fail to deliver the public goods needed from them and tend to overstrain the private sector with regulations and controls. The nations that are likely to grow more quickly are in particular those which have better conditions of competitiveness and have less cases of corruption ( ). So, one of the evident outcomes of corruption is that it raises uncertainty in the economy, raises transaction costs and leads to ineffective economic results or outcomes. Also, corruption slows down long-term domestic and foreign investment, and pushes companies to the informal sector. As informal businesses grow, they destabilize the government's capacity to raise revenues and leads to high tax rates being levied on fewer taxpayers. In turn, this eases the government's capacity to provide fundamental public goods. A fierce circle of widespread corruption and informal economic activity can be the eventual negative outcome.
Actually, ( ) says that poor governance, corruption and lack of public and economic sector reform go together with causality running in both sides. In evaluating corruption in Latin America, there is a clear association between public and private actors. Corruption can be used to reduce the amount of fees or taxes collected by governments from private businesses and speed the granting of permission by the government to implement legal activities. Corruption eventually can change the outcomes of the regulatory and legal process, by provoking the government to either unduly favor one party over another in legal proceedings or fail to hinder illegal activities.
A decade ago, bilateral and multilateral donor bodies and global development and financial institutions did not distinguish corruption as a significant problem of development and governance which required premeditated programmatic involvements. Since 1994, a lot has significantly changed and there have been opportunities to deal with corruption and promote transparency and accountability. Also many Latin American countries have signed global conventions against corruption and related treaties, so they have become somehow formally committed to introducing reforms to fight and control corruption.
Today, corruption is widely recognized as an important development and governance problem for transition and developing nations. Presently, many international donors are sponsoring a broad variety of programs to reduce corruption. These donors have also financed numerous studies which have acquiesced critical information and data that has significantly enhanced the understanding of the causes, nature and consequences of corruption as well as the creation of anti-corruption tactics. Other institutions such as Transparency International have mobilized crucial sectors of the Latin America society, advocate reforms to fight corruption and motivate people to be actively involved in government oversight. Currently, in Latin America, corruption is significantly perceived as an issue which can be talked about, tackled and reduced instead of being viewed as a cultural element that can only be accepted with acquiescence.
Also, in Latin America, in the last decade, the international donor community and multilateral organizations have funded various programs equipped at developing public sector management and promoting greater transparency and accountability in government. ( ) agrees that the results of such efforts appear to be mixed. Even though more empirical analysis and research is vital to analyze the effect of such projects, the record appears to be filled with examples of programs which succeed at first, but are challenged by subsequent political or economic crisis or governments. Additionally, ( ) states that current evaluations of anti-corruption programs in Latin America conclude that at least there are some success stories of reducing corruption levels in a sustained way. Nevertheless, a significant portion of Latin Americans believe that corruption is still rampant in their nations.
Countries in Latin America presently have greater access to widespread legal, technological, administrative and institutional tools that tackle corruption. Also many countries in this region have made notable improvements in the modernization of their procurement practices, management and financial systems, and strengthening of their public prosecutors, and audit institutions. In numerous degrees, most countries in Latin America have also embraced ICT initiatives in a bid to improve government effectiveness, efficiency, accountability and transparency. What's more, most Latin American countries have made significant progress in improving their legal, constitutional and institutional structures. Some countries have passed constitutional improvements to increase the professionalization and independence of the judiciary. On the other hand, other countries have introduced new legislation and they have created new institutions like anti-corruption agencies ( ).
Currently, in Latin American countries, there are inspiring examples of institutional and local reforms which show sustainability even though there are still high levels of systemic corruption. For instance, the internal control program in Colombia, the participatory budgeting in Brazil, the social auditing in the Dominican Republic and strengthening of the IRS in Ecuador are encouraging examples of national reforms. Even though the effect of such efforts in reducing corruption has been modest, these innovations can play an instrumental role in tackling corruption in the future.
Lastly, awareness about the issue of corruption has notably increased in Latin American countries. Although a lot remains to be done with regard to raising awareness about the association between economic development and corruption, currently, unlike in the past, corruption is an issue that is openly and widely discussed as part of the policy agenda ( ). In the regional agenda, corruption has become a main concern theme. Latin American governments are currently being forced to address this problem by domestic pressures. It is widely considered that if countries in Latin America do not effectively address the problem of corruption, chances are that some countries would lose investment opportunities and strategic assistance.
Widespread corruption in Latin America is viewed as one of the most vital threats to deepening democratization and it remains a big problem that destructively affects the region's democratic and economic development and also places a huge burden on its people. In this region, corruption is heavily rooted and this means that any considerable modification shall come in the shape of a change in the perspective of impunity of the privileged corrupt acts. Corruption is common, however measuring its extent is naturally challenging since the incidence of corruption varies from nation to nation, ranging from normal to common to systemic.
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