Corruption in Bangladesh: Background causes and current scenario kground causes and present...
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Transcript of Corruption in Bangladesh: Background causes and current scenario kground causes and present...
Corruption in Bangladesh: Background causes and current scenariokground causes and present scenariokground causes and
present scenario
N N TARUN CHAKRAVORTY
Background• Debate on the effect of corruption on growth and
development• efficiency enhancing strand / speed money theory
(Leff ,1964; Huntington, 1968; Lui, 1985; Leys, 1965; Khan, 2006; Morgan, 1964; Mankiw, 2000)
• efficiency reducing strand / sand the wheel theory (Myrdal, 1968; Rose-Ackerman, 1978; Mauro, 1995; Shleifer etal, 1993; Kaufmann et al, 1999; Reinikka et al, 2004; Brunetti et al, 1998; Mo, 2001), Tanzi et al, 2001; Gymiah-Brempong ,2002; Shleifer et al, 1993; Fisman et al, 2007; Chakravorty, 2014)
Debate…
• Third strand: May be beneficial in a second best world i.e. when bureaucracy is stuck in corruption and institutions are dysfunctional (Rose-Ackerman, 1978)
• Indeterminate or no effect: (Wedeman, 1997; Shaw et al, 2011)
Bangladesh: corruption ‘96 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11
Bangladesh 51 91 102 133 145 158 156 162 147 139 134 120
No. Of countries on the lowest or below
3 0 0 0 1 1 8 18 33 41 43 63
Nigeria 54
Haiti 145
Chad 158
Haiti 163
Somalia 179 180 180 178 182
Bangladesh: poverty
1992 1996 2000 2005 20100.00
10.00
20.00
30.00
40.00
50.00
60.0056.60
50.1048.90
40.00
31.51
Poverty headcount ratio at national poverty line (% of population) Bangladesh
Poverty headcount ratio at national poverty line (% of population) Bangladesh
Bangladesh: growth
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.00
GDP growth rate in BD as compared to SA
GDP growth rate BD GDP growth rate SA
Bangladesh: development
19921993
19941995
19961997
19981999
20002001
20022003
20042005
20062007
20082009
20102011
20120
10
20
30
40
50
60
70
80
90
100 Infant mortality rate in BD as compared to SA average
Mortality rate, infant (per 1,000 live births) BangladeshMortality rate, infant (per 1,000 live births) South Asia
Corruption: background causes
• The reason why institutions have remained cumbersome, fragile and unresponsive to people’s needs is rooted in the colonial period, which was further aggravated during the Pakistan period Lewis (2011)
• Result of centuries of oppression and exploitation by corrupt Pakistani administrators and rulers Urch (2008)
• A corrupt bureaucracy: a legacy of Pakistani army rule
• ‘Freedom fighter’ factor and leniency • Appointment of freedom fighters and party men
Corruption: background causes
• Expropriation of SOE’s and handing over to party men• Discretionary power• Authoritarianism in democratic process, absence of
opposition parties• Difference in the causes of corruption between 1972-
1975 and 1975-onwards• Mutual understanding between political parties not to
put the corrupt opponents under trial while in power• From 1976 onwards, handing over of SOE’s involved
corruption• Crony capitalism, false democracy…
Corruption: current scenarioResponse to questionnaire / questions How respondents rank
obstacles
Refusal to attend questionnaire
40.65% Bribe as no.1 obstacle
22.8%
Refusal to answer ‘bribe’ question
14% Bribe as no.2 obstacle
22.8%
negative positive Refused Extortion as no.1 obstacle
3.3%
If paid bribe to carry out business 0% 67% 28.3%
Extortion as no.2 obstacle
27%
If paid bribe during operation 0% 87.5% 12.8%
Bribe as a retarding factor
49%
If paid extra to get things done in gov. offices e.g. renew license
0% 78.1% 21.9%
Either bribe or extortion as a retarding factor
49%
Corruption: current scenario Official fees(BDT) paid has to pay
Formation of a company
60,000.00 to 100, 000.00
2,403,241.56
Total informal pay 2,633,141.00
During operation 1, 036, 577.00
For export, per invoice
400.00
For import, per consignment
10, 000.00
For CA/law firm 1,292,531.00For CnF 1,569,540.00
Story of bribery 1
• Turn-over of the company: BDT 420, 000, 000.00
• Taxable turn-over: BDT 100, 000, 000.00• VAT payable: BDT 15, 000, 000.00• Share for the VAT collector: BDT 1, 000,
000.00• Paid as VAT to the state: TK. 5, 000, 000.00 • The firm owner : TK. 9, 000, 000.00 for
himself
Story of bribery 2• Monthly electricity bill: TK. 600, 000.00 TK. 7, 200, 000.00 for a year Bill paid: TK. 4,000, 000.00 Amount unpaid: TK. 3, 200, 000.00Meter reader is paid: TK. 1, 500, 000.00 The owner misappropriates: TK. 1, 700, 000.00 • Monthly gas bill: TK. 250, 000.00 TK. 3, 000, 000.00 for a year Bill paid: 1, 500, 000.00; Bribe: TK. 750, 000.00 Misappropriation by the owner: TK. 750, 000.00
Story of bribery 3
• To get a contract like equipment supply to BD gov. a foreign company has to pay 2.8 million US dollars to each of the five concerned ministries. Therefore, in total a company has to pay 14 million US dollars to get hold of such a contract from the Bangladesh government.
Conclusion• Absence of true democracy• Political favouritism, crony capitalism• Expropriation and handing over of SEO’s involved
corruption• No trial and punishment of the corrupt• Corruption has been a norm in Bangladesh and
people are desensitized and no protest from the people against corruption
• Businessmen are the most corruption in Bangladesh