The Paradox of Corruption as Antithesis to Economic Development: Does Corruption Undermine Economic Development in Indonesia and China, and Why Are the Experiences Different in Each Country?

• Main Author: WHITE, Andrew
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2006
• Subjects: Corruption; Economic Development; Law and Development; Indonesia; China; Asian Studies; Law and Economics; Law and Society
• Online Access: https://ink.library.smu.edu.sg/sol_research/785; https://ink.library.smu.edu.sg/context/sol_research/article/1784/viewcontent/APLPJ_08.01_White.pdf
• Institution: Singapore Management University

The question of whether corruption is antithetical to economic development has been extensively researched and debated since the 1960s. While nearly all participants in the debate appear to agree that corruption ultimately is antithetical to long-term economic development, the extent to which it positively or negatively affects economic development in the short term depends upon highly contextual factors. In different countries and regions of the world, factors of local culture and history, the nature of the state, the type of corruption and actors involved, and the political responses and motivations to curtail corruption all inform the answer to this question. Two countries are considered in this article: Indonesia and China. These countries were chosen for discussion because both are rife with corruption, especially in public administration and, although both are in Asia, they represent very different cultures and political systems from each other. It is suggested in this article that corruption in Indonesia is a significant deterrent to economic development and is a problem which needs to be addressed more vigorously and eliminated by the Indonesian government. Corruption in Indonesia not only siphons-off and reallocates resources in a non-productive manner, it also discourages much-needed direct foreign investment. Paradoxically, corruption in China appears to be a useful State tool that actually encourages economic development in the short term, while creating less optimistic long-term prospects. Due, in part, to the nature of China’s political system, corruption appears to advance economic development by slowing political reform while still allowing less disruptive market reforms. Accordingly, an analysis of corruption as it affects economic development in Indonesia and in China illustrates that the extent to which corruption is antithetical to economic development ultimately depends upon context.