7. CORRUPTION AND GOVERNANCE IN EARLY CAPITALISM: WORLD BANK STRATEGIES AND THEIR LIMITATIONS

Abstract

One of the most dramatic changes in the World Bank's approach to development over the last ten years has been its new commitment to governance improvements and in particular to fighting corruption in some of the poorest countries in the world.Driven by evidence that corruption reduces growth and investment in developing countries, the Executive Board of the Bank approved its anti-corruption strategy in September 1997, defining corruption as the "use of public office for private gain".According to the strategy, the Bank was to address corruption along four dimensions: preventing fraud and corruption in Bank projects, helping countries which request Bank assistance for fighting corruption, mainstreaming the concern with corruption in all of the Bank's work and lending active support to international efforts in fighting corruption.These concerns were reflected in the World Development Report of 1997 and have been central to the subsequent concern of the Bank with governance and institutional reform.More recently, the Bank has argued that "there is nothing more important" than the fight against corruption (World Bank 2000).The immediate effects of the se policy announcements have been a much greater degree of concern with accountability within the Bank.At the same time, there has been a closer examination of the corruption and governance implications of Bank policies.Some older policies now have their anti-corruption content more openly expressed, in other areas there are new emphases.Thus Bank support for programmes involving liberalization, reforms of the civil service, "rightsizing the state" and privatization were given renewed impetus with an emp hasis on the anti-corruption and governance improvement aspects of these reforms.In addition, there was a shift towards new areas for the Bank such as support for decentralization, devolution and democratization, and for greater civil society participatio n in monitoring developing country states.