Is Corruption Really an Economic Death Sentence

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Send us Fan MailThis text explores the complex relationship between corruption, democracy, and economic growth, challenging the common narrative that dishonesty and political freedom are the primary determinants of development. By comparing nations like Zaire and Indonesia, the author demonstrates that high levels of graft do not always prevent prosperity, especially if stolen wealth is reinvested locally rather than sent abroad. The source argues that neoliberal policies, such as deregulation and "New Public Management," often exacerbate corruption by introducing market forces into the public sector and reducing government tax revenue. Furthermore, the author highlights a fundamental tension between democracy and free markets, noting that neoliberal efforts to "depoliticize" the economy actually undermine democratic control. Historically, today’s wealthy nations were spectacularly corrupt during their own industrialization, suggesting that economic development provides the resources to reduce venality rather than the other way around. Ultimately, the text posits that institutional quality and political choices are more significant to a nation's success than the simple presence or absence of corruption.