3 EXPLOITING NATIONAL GOVERNMENT
53
Foreign aid is a significant source of government revenue where the World Bank and national aid agencies give developing countries billions to spend on capital-intensive projects for improving infrastructure, health and education facilities. The economic criteria that qualify countries to receive foreign aid do not include good governance. In countries rich in natural resources, such as oil, gas and minerals, there is a demand from large multinational corporations for government licenses to extract and sell these resources in world markets. National governors with the political power to grant licenses may do so in exchange for payments that put money that looks big in their foreign bank account but is very small by comparison with the profit a multinational corporation can make. Contrary to the intention of governments providing foreign aid, the hypothesis that follows is: The greater the importance of foreign money to a national economy, the higher the level of national corruption. Theories of inequality postulate that the greater the inequality in a society, the more political power will be concentrated rather than distributed equally. Ethnic identification based on the race, tribe or language is a categoric form of differentiation that can create political inequality between ethnic groups that are in control of government and ethnic groups that are outsiders (Posner 2004). Insofar as public officials favour claimants who belong to the governing ethnic group, public resources are not delivered by the book. Members of the ethnic group in power can get what they want by using ethnicity as a hook to get around rules, while outsiders have to pay bribes to get what they want. It follows that: The greater the extent of ethnic inequality in a country, the higher its level of corruption. Many theories of economic inequality assume that those with the most money will be able to translate their wealth into political power and use this power to benefit themselves. However, the implication of this assumption for national corruption is problematic. In economically developed societies people who benefit most from national prosperity may favour governance by the rule of law in order to protect what they enjoy, such as favourable tax policies and the properties and lifestyles of the wealthy. In developing countries offering limited resources for accumulating income and wealth in the private sector, economic inequality can be a consequence of those in high office using their power to exploit the state’s income and resources. The absence of an unambiguous theoretical hypothesis leaves open to empirical testing what effect, if any, a higher level of national income inequality has on corruption.
