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Leadership, corruption and poverty trap
Abdullah A Dewan

          THERE are estimated 1.3 billion people live in countries where Islam is the dominant religion. Over the centuries, Islam has declined from its glorious days of wealthy and influential culture to one of poverty and stumpy levels of education. Many of these Islamic countries are poor because their rulers infringe the fundamental norms of good governance, rule of law, and they are corrupt to their teeth. The fair play of democracy and freedom of the press threatens their hold on power and threatens the tradition of inheritance to power by their children. Many of these kitschy rulers have little or no education and depend on gaudy advisers and bureaucrats who act to delight the rulers instead of being good public servants.
Most of these rulers' level of education is so measly? that they may not have the knowledge and understanding
* Of the functions of political leaderships, major duties in public service, and limitations of a position of leadership in a democracy, and ethical dilemmas that routinely confront political leaders;
* Why respect for the rights of others, ability to work with others, reliability or dependability, courage, honesty, ability to be fair, and willingness to acquire leadership knowledge and skills are important.
* Of the role of "opposition", the role of media, and the voices of dissent. Why should a leader hold regular press conferences and make governance as transparent as possible?
* Of the indispensability of putting the interests of the people ahead of personal and party interest.
* That leader must not behave incoherently once their roles are switched from Prime Minister to Opposition Leader and vice-versa.
Given our experience, neither Sheikh Hasina nor Khaleda Zia displayed that they have fulfilled these conditions as expected of a true leader. Bluntly speaking, Bangladesh has no national leader. Here politicians come to power not for reasons of altruism but for engaging in wheeling and dealings for their own self-interest.
With a university degree, years of political grooming and father-daughter dynamics, Hasina did not impress too many people that she is politically a savour vivre and an astute leader. She had all the pre-requisites for accession to the position of a great leader but her straight talking blunt manner and lack of confidence on close associates (although, for good reasons) became her Achilles' heel.
Absence of a true national leader got the country entrenched in a highly bureaucratic setting. Here a person who applies for an official action on any matter literally must move with his file and grease every one at every step to keep his case moving. This is typical of most poor countries of the world and with the exception of Malaysia and Tunisia, has been typical of all Muslim countries as well. One peculiarity in Bangladesh is that here the politicians who are alleged to be corrupt always cry foul against corruption and blames bureaucracy as the escape goat for holding economic growth and prosperity, although the "goats" are their raising.
Economists are interested to know if bureaucracy (as measured by the number of procedures required to start a business) is correlated with economic performance because rich countries have less bureaucracy than poor countries. It is argued that one mechanism through which bureaucracy may affect economic performance is corruption. It is quite possible that bureaucracy leads to corruption and corruption in turn affects economic performance.
There are empirical studies which examined the empirical interrelationships of corruption perception index (CPI), GDP per capita in 2000 (based PPP dollars), and a number of procedures (measure of bureaucracy). Note that high CPI number means lower corruption. There are two hypotheses of interest.
Is bureaucracy-related to corruption? The hypothesis is: there is a negative relationship between CPI and the number of procedures. This implies countries with greater number of procedures required to start a business are more corrupt.
Second, examine the relationship between the GDP per capita and corruption. The hypothesis is: Are poor countries more corrupt?
Economic theory suggests lower corruption is associated with higher GDP per capita. Therefore, poor countries are more corrupt than rich countries. It could be that low GDP causes corruption. Poorly paid public officials may be supplementing their official income with kickbacks. It could also be that poor countries do not have the technology to monitor public officials. For example, a search through computerised records makes it easier to detect sleaze. However, it could also be that high corruption causes low GDP. When public officials are shady, people who are not willing to give bribes will not engage in business activity. The caveat of being asked for a bribe lowers the incentive to invest. Also, if public officials are corrupt they may award a public project not to the lowest and the most efficient contractor but rather to a friend or someone who is willing to kickback.
In order to investigate if bureaucracy is associated with a low GDP because bureaucracy is associated with corruption, one would like to know if countries with the same level of corruption but more bureaucracy have a lower GDP. If countries with the same level of corruption but more bureaucracy are poorer, one may conclude that bureaucracy has direct effects on GDP. If on the other hand bureaucracy has no effect among countries with the same level of corruption one may conclude that bureaucracy affects GDP only through its effect on corruption (that is indirectly).
The hypothesis is tested by examining the relationship between bureaucracy and the log of GDP (to minimise variance GDP is expressed in natural logarithmic scale) for groups of countries with similar level of corruption. To do this, the data are sorted by corruption into four groups those with CPI between 1 and 3, between 3 and 5, between 5 and 7, and between 7 and 10. Then examine the relationship between the number of procedures and the log of GDP for each of the four groups of the data by having four scatter plots or calculating four correlation coefficients one for each group of countries. This will suggest if the number of procedures has a direct effect on GDP or is all the effect on GDP channeled through corruption?
Once we control corruption the relationship between the number of procedures and GDP is much weaker. In fact, for the first two groups of countries with the highest corruption the countries that have high number of procedures actually have a higher GDP. The relationship for the other two groups is reverse but still quite weak. Thus, countries with the same corruption levels but different number of procedures do not have different GDP. This suggests that the number of procedures required to start a business does not affect GDP directly but rather through corruption.
A country in which the chief executive is encircled by "wheeler and dealers" who in turn depend on the inefficient and shady bureaucrats is destined to face what Bangladesh is facing today. Poverty alleviation is progressing at deplorable 0.52 percent well below the target rate of 2.2 percent. Common but easily curable diseases are killing thousands of poor people every year for lack of basic medical care. Nearly 75 million people are living in shanty towns, without clean drinking water, or sanitation; only 12.2 percent live in concrete houses and nearly 70 percent have no proper housing. In rural areas, 10 percent of landowners hold 50 percent of the land, and 40 percent of small farmers own just 2 percent of arable land.
Absence of leadership and visions over the last five years (Freedom House's 2004 Legal System and Property Rights Index) have caused the rule of law index slip from 5.0 to 3.2; judicial independence slip from 3.7 to 3.2; impartial courts index slide from 4.2 to 2.8; integrity of the legal system index plunge from 7.0 to 3.3. These and all other worsening statistics are discouraging FDI and straining relationships with WB, IMF and all development partners and caused a worldwide concern for Bangladesh becoming a "failed state".
Khaleda's 10 years legacy as the Prime Minister is now mired by her government's continued stigma of being the most corrupt government for five years in a sequence. Worse yet her son and brother are being alleged to have joined her ministers and political functionaries in looting the country in millions. Many of her party's MPs are political neophytes having little or no understanding of lawmaking, many listed as businessmen without any legitimate business listings. Hasina may have barely escaped that stigma because her party functionaries' misdeeds are seemingly overshadowed by BNP's wheeling and dealings, black money protection and increasingly nonsensical politicisation of the government machineries and the judiciary.
So what's the choice for the voters in the next general election? If BNP comes to power its wheelers and dealers will intensify their current doings. If AL comes to power, the same old face will appear on TV screen, and if good senses prevail, they may realise why they lost the power last time in 2001. But my best guess, there will be no tangible difference in poverty alleviation and plight of the poor. The country is in an inescapable "poverty and corruption trap" placed by a group of "wheelers and dealers". Only a new leader and new faces can rescue the people out of this ensnare.
The writer is Professor of Economics, Eastern Michigan University, USA


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