This paper outlines the IMF’s perspective on the economic impact of corrup-tion and experience in helping countries design and implement strategies to address it. Corruption has a broader cor¬rosive impact on society. It undermines trust in government and erodes the ethical standards of private citizens. A holistic, multi-faceted approach is needed—one that establishes appropriate incentives and the rule of law, promotes transparency, and introduces economic reforms that reduce opportunities for illicit behavior. Perhaps the most import¬ant ingredient for a successful anticorruption approach is the development of strong institu¬tions, centered on a professional civil service that is sufficiently independent from both private influence and political interference. Corruption afflicts countries at all stages of development. Indeed, some developing coun¬tries score better on corruption indices than many advanced countries. Corruption has a pernicious effect on the economy. Pervasive corruption makes it harder to conduct sound fiscal policy. Corruption also undermines certain types of public expenditure to the detriment of economic performance.
Traditionally, public officials have been somewhat nervous about discussing corruption openly. Over the past several years, however, I have been struck by the extent to which world leaders are now willing to talk candidly about this problem. It is not just that the economic costs have become self-evident. It is also because there is an increasing demand for change. In a recent global survey, corruption was regarded as the “topic most frequently discussed by the public,” ahead of poverty and unemployment (survey cited by Klitgaard 2015, p. 15). Given that both poverty and unemployment can be symptoms of chronic corruption, my view is that the priority given to this problem by the public is entirely justified.
Thank you for giving me the honor of speaking with you on the occasion of this Summit of the Organization of African Unity. I am all the more conscious of this honor because this meeting is taking place at this particular point in time. Despite all the tragedies besetting it, Africa is moving forward. Economic growth has resumed in most of the continent, and your countries are reaping the fruits of implementing sound economic policies.
At the dawn of the twenty-first century, Africa is at a crossroads. It must quickly select the path it wishes to follow. Either the continent takes its destiny squarely into its own hands, or it leaves the shaping of its future to chance or to special interests. Africa does indeed have a choice. On one hand, it can allow the forces of implosion and ethnic warfare to become the masters of its fate, to the advantage of a few potentates lacking in vision or warlords with transient alliances. Thus, history would repeat itself, with all the suffering that this entails, and this old continent will be at the mercy of all types of corruption. Africa would be stripped of the wealth of its soil and the promise of its youth and left marginalized, adrift in the wake of history.
International Monetary Fund Managing Director Christine Lagarde delivered this address at the Library of Congress as part of the Library’s Henry A. Kissinger Lecture Series in Washington, D.C. on December 4, 2018.
It is an honor to be with all of you tonight. Although he cannot be here this evening, I know we are all profoundly grateful to Dr. Kissinger for launching this important lecture series nearly 20 years ago.
I am honored to be here to share with you the IMF’s thoughts on the turbulent events of the past two years and what lies ahead. With growing signs that the worst of the financial crisis is over, we now have an opportunity to reflect on the weaknesses revealed and remedies needed. But that does not mean that we can afford to be complacent. We are being given a chance to right the wrongs, and delay would only sow the seeds of the next crisis.
It is a great honor to be here to deliver this year’s Stavros Niarchos Lecture. I would like to thank Adam Posen and the Stavros Niarchos Foundation for so kindly inviting me— and a special thanks to Larry Summers for his warm words of introduction.
This paper explores how poor countries might take advantage of globalization to raise their living standards and converge toward the advanced economies. The poor country, which has cheap labor and inadequate capital, acquires the supe¬rior technology that the rich country has. With everyone rationally expecting greater things in the poor country, investment there takes off. People in the rich country save more to invest and take advantage of the new higher returns in the poor country. The poor country runs a substantial current account deficit and imports needed capital that the rich country happily, and profit¬ably, provides. The developing countries showed limited willingness and capacity to open up to competition. They had only a limited ability to attract foreign investment. The IMF ended up studying why some members failed to progress despite prolonged use of IMF resources. The Philippines, for example, had about 20 nearly consecutive IMF lending programs.