Professor: Corruption Often Follows Reforms

Professor: Corruption Often Follows Reforms
By Michael Coleman / Journal Washington Bureau
Oct 19, 2011

WASHINGTON – When a notoriously corrupt nation gains new leadership and begins to implement market reforms, the world usually applauds.

But as Luigi Manzetti, a political science professor and former director of Latin American studies at Southern Methodist University explained in a Journal interview, the cause for celebration is often short-lived.

Manzetti, the third speaker in the Albuquerque International Association’s four-part lecture series on global corruption, will explore the pitfalls of aggressive market reforms in a talk titled “When Good Intentions Fuel More Corruption: Market Reforms and Crony Capitalism in Latin America and Russia.” The lecture is Sunday from 3 p.m. to 5 p.m. at the UNM Continuing Education Auditorium, 1634 University NE, Albuquerque.

Manzetti said he will discuss why corruption and crony capitalism remain so prevalent in Russia and many Latin American countries, despite the promise of democratic and market reforms more than two decades ago. He said that although sweeping political and market reform of the 1990s promised great improvements for many of these countries, today their corruption is as bad as – or even worse than – ever.

“If you look at the statistics we have available, a lot of these countries are worse off in controlling corruption than they used to be,” Manzetti said.

Manzetti said rooting out corruption with market reforms can work only if a number of factors are contributing to the change.

“If you have a good democracy and politicians are restrained in the exercise of their power, and you have checks and balances (among different branches of government) and the judiciary is independent – if all these conditions are there, then these models work,” he said.

Unfortunately, this is rarely the case – and especially not in Russia, Argentina and Chile, Manzetti said.

“New policies were adopted but not always as suggested,” Manzetti said. “They (government leaders) were not well-intentioned in increasing transparency and government accountability. They did it with an eye to consolidate their own political power, which meant creating policies that favored the business community to create a center of power, which in turn would finance their own re-election campaigns and allow them to take bribes.”

He said this kind of rigged capitalism ultimately has an adverse effect on a nation’s economy, even if it initially fuels growth.

“When you create a system of crony capitalism, you don’t create competition,” Manzetti said. “At some point, the growth stalls once the initial investments are made.”

Manzetti said widespread, positive economic reforms are worth pursuing but almost never happen overnight.

“There is a tendency in America to think that if you get the right set of policies things can change very rapidly, which is completely unproven in the historical record,” Manzetti said. “It takes time to reverse, so one has to be very realistic about what is possible in the short term.”