Corruption, Transparency and Citizenship in Latin America

On November 3^rd, the Dialogue co-hosted an event with the George Washington University Elliot School of International Affairs Latin American & Hemispheric Studies Program for a discussion on corruption, transparency and citizen security in Latin America. With few exceptions, Latin America as a region has experienced chronic corruption. This is partially a result of the lack of incentives for politicians to pursue long-term welfare enhancing policies and political institutions that do not respond to the best interest of citizens. In this context, individual political engagement can improve decision-making. If citizens are better informed about specific policies and the results of those policies, they can reward those who provide effective policies by keeping them in office. Transparency initiatives that increase the amount of information available to the public should lead to better policies long-term. The question is, do they? Dr. Stuti Khemani, senior economist for the development research group for the World Bank presented on the issue of politics and development and  Kevin Casas Zamora, director of the Peter D. Bell Rule of Law Program at the Inter-American Dialogue discussed the changing context of corruption in Latin America.  

Khemani’s presentation focused on the perceived corruption in politics that exists within politics as well as looking at government failure in providing public goods. Khemani also analyzed the role of political engagement and transparency, specifically highlighting that political engagement occurs in all types of government systems, from democracies to autocracies. With transparency, citizens have access to information about the actions of officials and agencies in their government. Khemani noted that poor citizens tend to vote in higher numbers than wealthier citizens. She highlighted that Latin America scored among the highest regions in the world for the question of whether citizens feel that their vote matters. In addition, Khemani mentioned the issue of press freedoms in Latin America as a whole, specifically in Mexico, Colombia, and Venezuela.

There was also a discussion of both political engagement and transparency. With regard to political engagement, Khemani mentioned that how leaders are selected matters in understanding and explaining government failures as well as how to solve them. Regarding transparency, she noted that there should be a focus on fostering political engagement at all levels of government, starting with the lowest levels. The impact of transparency on corruption depends on whether or not transparency has fundamentally changed incentives and behavioral norms in the public sector. Political engagement responds to transparency, according to Khemani. Information increases the likelihood of the removal of corrupt leaders from office and information reduces clientelism and the use of ethnic identity politics.

The impact of transparency emerges through political engagement and the role of mass media is utilized to assist in holding leaders accountable. Political engagement and transparency are able to cause institutional change in the following ways: investments in formal capacity and technology building are not enough, effective institutions are more effective when done at the local level, and the convergence of transparency and political engagement helps to bring about change.

The policy implications that Khemani highlighted are that transparency should be targeted in order to improve the quality of political engagement and that non-political citizen engagement initiatives should be designed to take into account political behavior.

Finally, Khemani raised two potential risks and questions. One is that citizens and voters may not respond to transparency or may respond in contradictory ways. The other is that there is little evidence of the long-term effects on governance outcomes.

The presentation for Casas-Zamora highlighted the way in which the context of corruption has changed. Casas-Zamora looked at specific country cases: Brazil with the Petrobras scandal; Chile with campaign finance and tax irregularity scandals;  Mexico with conflict of interest issues; Guatemala with La Linea (customs agency embezzlement and the resignation of president Otto Perez Molina); and Honduras with embezzlement of $320 million in the social security agency.

Casa-Zamora defined corruption as the abuse of power for private gain but cautioned that no definitive definition of corruption exists. Types of corruption were also highlighted: petty vs. large scale, transactive vs. extortive, and systemic.

The causes and effects of corruption highlighted included both factors and effects. The factors encompass the following: national wealth levels, unitary state structures, freedom of the press, democracy, and trade openness. The effects include: investment and growth levels, wealth inequality, effectiveness of foreign aid, the composition of government expenditure, legitimacy of government institutions, and support for incumbents.

Casas-Zamora gave some important statistics regarding corruption in Latin America. According to the Corruption Perceptions Index, in 2015, 12 of 18 countries in Latin America were in the bottom half of all countries in the index. Uruguay (21) and Chile (23) do best while Venezuela (158) does the worst. In 2006, one in four citizens in Latin America believed that paying a bribe was justified in some circumstances, while the number had jumped to one in six by 2014.

There was also a discussion of efforts to combat corruption. There have been many international conventions and agreements such as the Organization of American States (OAS) Inter-American Convention against Corruption. There have also been many national laws and policies such as auditing institutions, access to public information rules, asset disclosure requirements, campaign finance regulations, and fiscal transparency laws, and anti-money laundering laws.

There were five hypotheses given by Casas-Zamora on recent anti-corruption activities in Latin America: 1) increasing public sector transparency (more information available; 2) changes in patterns of access to information (specifically the increased use of the internet and social media); 3) expansion of the middle class; 4) perceptions of unfairness (the idea that political institutions are biased); and, 5) the economic downturn (the worse the economy, the stronger the perceptions of corruption). According to Casas-Zamora, the convergence of all five of these hypotheses is important.

Casas-Zamora concluded with several policy recommendations. He highlighted that better information is needed on corruption. Analysis should be conducted specifically on Latin America with respect to corruption. There should be a focus on normative and institutional transformations. Vulnerable areas in particular should be looked at in the area of corruption such as: the police, courts, local government, public procurement, tax collection, and campaign finance. An investment in democratizing access to information and communications technology needs to be undertaken. Finally, Casas-Zamora noted the importance of adopting pro-equity policies in order to help stem corruption in Latin America.