Controlling Corruption and Promoting Good Governance: A New Challenge for Aid Policy

Bruno Speck

No S 13/2004, SWP Research Papers from Stiftung Wissenschaft und Politik (SWP), German Institute for International and Security Affairs

Abstract: Concerns about corruption control have grown in national and international politics. The debate about the role of corruption and good governance in aid policy develops along three different paths. Corruption scandals in the South raised the question of what strategies and tools donors might offer to countries willing to fight corruption, and second, whether countries with an extremely poor governance performance should be cut off from aid. Finally, should more preventive measures be taken to guarantee the integrity of resource flows? This paper argues that corruption control as a programmatic approach for aid policies is still a work in progress. The main tools available - diagnostic surveys, studies of institutional integrity - need more conceptual groundwork and empirical testing. Donor countries should carry out these expensive and time-consuming efforts to measure corruption and identify systemic flaws concertedly. Sanctioning corrupt governments by withdrawing aid or rewarding countries that perform well on established good governance indicators are policies based on the concept of efficient allocation of resources. However, recipient countries that do poorly on governance are not uniform in terms of their internal problems and reformers in these countries require international support. Therefore, aid to the poorest and most corrupt countries can not simply be made conditional. Aid projects require better protection against corruption. Project planning has to take into account the specific perils of private interests channeling resources to specific local clients. The training of experts should include a module on corruption control. Direct budget support increases the responsibility of donors to the integrity of resource allocation. Earmarking national aid to specific national service providers should be banned.

Date: 2005, Revised 2005
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