Poverty and Corruption

Abstract

"A stocktaking of both past and current efforts to reduce poverty suggests that corruption has been a constant obstacle for countries trying to bring about the political, economic and social changes desired for their development. Across different country contexts, corruption has been a cause and consequence of poverty. Corruption on the part of governments, the private sector and citizens affects development initiatives at their very root by skewing decision-making, budgeting and implementation processes. When these actors abuse their entrusted power for private gain, corruption denies the participation of citizens and diverts public resources into private hands. The poor find themselves at the losing end of this corruption chain — without state support and the services they demand. At the same time, corruption is a by-product of poverty. Already marginalised, the poor tend to suffer a double level of exclusion in countries where corruption characterises the rules of the game. In a corrupt environment, wealth is captured, income inequality is increased and a state’s governing capacity is reduced, particularly when it comes to attending to the needs of the poor. For citizens, these outcomes create a scenario that leaves the poor trapped and development stalled, often forcing the poor to rely on bribes and other illegal payments in order to access basic services. For a country, the results produce multiple and destructive forces: increased corruption, reduced sustainable growth and slower rates of poverty reduction.4 As the World Bank has aptly warned, corruption is ‘the greatest obstacle to reducing poverty’.5 Each of the paper’s following sections builds on understanding this cause-andeffect relationship between poverty and corruption and outlines the processes that serve to reinforce — as well as undo — their connection. 2. Understanding the poverty-corruption nexus Being poor does not only mean falling below a certain income line. Poverty is a multi-dimensional phenomenon that is characterised by a series of different factors, including access to essential services (health, education, sanitation, etc.), basic civil rights, empowerment and human development.6 The MDGs recognise this broader concept of poverty and the reality that it must go beyond pure income measurements. Its core document — known as the Millennium Declaration and signed in 2000 — promotes the values of freedom, equality, solidarity and tolerance for tackling the key development challenges to reducing poverty."