In Box

The Remittance Curse

Tajikistan receives more than $1 billion in remittances each year from Tajiks overseas, equivalent to a staggering 36 percent of the GDP of the notoriously corrupt country. And because most of the country's 7 million citizens lack sanitation, clean drinking water, and healthcare, you might think that this influx of cash is a saving grace for Tajiks on the receiving end.

Not necessarily. According to a new study by the International Monetary Fund (IMF), remittances may actually encourage government corruption and ineffectiveness. In an analysis of 111 countries between 1990 and 2000, researchers found that high levels of remittances often lead to greater corruption and irresponsible economic policies. In other words, officials in remittance-rich countries are often let off the hook for failing to provide basic services, freeing them to divert resources for their own purposes. "[T]here's less of an incentive for citizens to demand reforms" when remittances are high, explains Ralph Chami, a division chief at the IMF Institute and a coauthor of the report. And because the government assumes citizens with help from abroad will turn to the private sector for essential services such as healthcare and education, leaders face little pressure to change. "The government says, 'I know you're getting money; what’s my incentive to fix [the] situation?'" says Chami.

But not everyone is persuaded by the study's findings. Dilip Ratha, a World Bank expert on remittances, argues that though the risk of dependency on remittances exists, "one has to... put things in perspective and recognize that... the good things completely swamp the bad." But if a little extra cash helps a family get through tough times, it can also buy a corrupt government time to stall reform.

In Box

Judge Not

Crony judges appointed by friends in high places. Whistle-blowers punished for reporting corruption. Political influence bought through donations. Sound like classic corruption plaguing states on the brink? Think, instead, of countries like Canada, Spain, or Italy. Wealthy countries often suffer the same institutional weaknesses that breed corruption as developing nations do, according to a recent report by the Washington-based governance watchdog Global Integrity.

In assessing 55 countries on dozens of corruption safeguards, Global Integrity placed several G-8 nations in the same league as developing countries when it came to such critical protections as political finance laws, judicial transparency, and whistle-blower defenses. Although Italy received an overall rating of "strong" for government accountability, its laws shielding those who report corruption were rated as deficient as those in Ecuador and Tajikistan. France's safeguards against corruption in the civil service scored as low as those in Uganda, where nepotism and patronage are requirements for government jobs. And Canada received a rating of "very weak" for its lack of transparency in judicial appointments, the same rating as Kenya and Mexico. It's a "bit of a wake-up call that, even in the West, we haven't really solved a lot of these issues," says Nathaniel Heller, Global Integrity’s managing director.

But some experts argue that because Global Integrity doesn’t measure actual corruption -- just the potential for it -- more nuance is needed when interpreting the report's results. According to Troy Riddell, a political science professor at the University of Guelph in Ontario, "The study's methodology and conclusions overstate the lack of transparency [and] accountability in Canada," adding that "putting Canada in the same category as Kenya and Mexico exaggerates the problem." Heller disagrees. "It's actually interesting... to hear a lot of the reaction to the Canada assessment... from Canadians who said, 'You know what? This is accurate,'" he says. It suggests that, for all the Western sermonizing on corruption in the developing world, there's plenty of work to be done closer to home.