Figure 6.1 Comparison of Bangladesh’s CPI score and GDP per capita (2001–2009

US$

600

500

400

300

200 Score out of 10

3

2.5

2

1.5

1 GDP per capita CPI Score

100 0.5

0

2001 2002 2003 2004 2005 2006 2007 2008 2009 0

Figure 6.1 Comparison of Bangladesh’s CPI score and GDP per capita (2001–2009)i

Source: Transparency International <http://www.transparency.org/policy_research/surveys_indices/ cpi>, accessed 30 May 2011. World Bank, 2010a, <http://data.worldbank.org/indicator>, accessed 30 May 2011.

get around bureaucratic impediments. As suggested by Huntington (1968), Leff (1964) and Nye (1967) this is especially the case of cumbersome regulations, excessive bureaucracy and market restrictions. One line of research, as described by Lambsdorff (2007), argues that corruption is in fact a factor of production and so does not affect the growth of GDP.

Despite the magnitude of corruption in Bangladesh, the country has been experiencing a steady improvement in score in the Corruption Perceptions Index (CPI). As shown in Figure 6.1, the CPI score of Bangladesh has risen steadily since the country joined the index in 2001. One of the larger increases in ranking occurred in 2009 when CPI rose from 2.1 in 2008 to 2.4. This relatively large increase can be attributed to the introduction of institutional and legal reforms in the period of 2007–2008 which gives the government a greater capacity to tackle corruption (Transparency International, 2009). In the past 49 or 50 years, Bangladesh has experienced a high level of economic growth. Between 1960 and 2009 GDP increased from US$4,274,893,910 to US$89,359,767,442, that is, a growth rate of approximately 1990.34%. Exports have also experienced a drastic increase over the same period, rising from US$427,347,689.70

(approximately 10% of GDP) to US$17,360,479,651 (approximately 19.43% of GDP). Similarly, imports increased from US$397,875,424.2 to US$23,727,165,698 over the same period (World Bank, 2010a).

The similarities in trend between increases in CPI score and GDP per capita is shown in Figure 6.1. The figure shows that there is a correlation between CPI score and GDP per capita; as one rises, so does the other. As discussed earlier, Mauro (1996) found that this correlation was in fact causation. Evidence suggests, however, that if this is true for some countries, for example Bangladesh, it is definitely not true for others.

Remedies of corruption in Bangladesh

There exist a number of possible solutions for the corruption experienced by Bangladesh:

(1) Presently, both the Bureau of Anti-Corruption (BAC) and the

Comptroller and Auditor General (CAG) do not have enough power and authority to carry out their responsibilities effectively. Not only has it been estimated that it takes BAC an average of three years to investigate a case it has also been accused that it is itself corrupt (Zafarullah and Siddiquee, 2001). It is suggested, therefore, that the corruption within these institutions should be eradicated and that greater authority should be given to BAC and CAG. (2) Bangladesh does not suffer from a lack of rules against corruption, but a lack of enforcement. For example, according to Transparency

International (n.d.) many assistant engineers to the Bangladesh Power

Development Board (BPDB) own luxury cars which they should not be able to afford on their official salaries. In addition, Transparency

International (n.d.) reported that a ledger keeper for Dhaka Electric

Supply Authority (DESA) was able to purchase a house for Tk3.8 million as well as an allotment in a shopping arcade. Despite there being laws against public servants possessing money or property larger than their official salary, no action has been carried out against these obvious violations. (3) In 1972, the Bangladesh Constitution allowed for an ombudsman that had power to investigate complaints against a ministry, an official or

a statutory public authority (Zafarullah and Siddiquee, 2001). Since then, however, Bangladesh has failed to create such a body, a lacking that needs to be corrected. Without good leadership, the government cannot expect the Bangladeshi community to change its ways. (4) As suggested by Transparency International (n.d.) the Bangladesh

Bank should have complete autonomy from the government to ensure that it is not influenced by politics. In addition, if greater transparency in political party funding sources existed it would be more difficult for them to receive contributions from bank defaulters. (5) To minimize corruption in the customs sector a system needs to be introduced which makes officers responsible for any “misuse of power for gainful power”. In addition, the amount of speed money in transactions can be reduced by removing inefficient steps from appraisals, while keeping the integrity of the assessment procedure. (Transparency International, n.d.).

Conclusion

As can be seen from Table 6.1, on a global scale Bangladesh ranks poorly with respect to corruption. The paper then explored the magnitude of corruption within the country. It found that the police department is the most corrupt public institution within the country and that the number one type of corruption in Bangladesh, with 1336 cases in 2003, was the abuse of power.

The lack of dedication of the judiciary to the cause was emphasized with approximately 24% of cases filed annually resulted in a conviction. This costs the government around 1.85% of GDP.

The main cause of corruption in Bangladesh is shown to be a lack of regulation, particularly in the banking, customs and telecommunications sectors. Public officials in both banking and customs sectors take advantage of too much power and a lack of regulation. In the telecommunications sector a lack of regulation by the government has resulted in the growth of illegal VoIP services.

The consequences of corruption are then explored. It was found that two opposite conclusions could be drawn; corruption can retard, or promote growth. The main arguments for the former is that it

distorts the composition of government expenditure. Mauro (1996) found an increase in CPI score can also increase a country’s investment rate and annual per capita GDP growth rate. On the other hand, it is argued that those who receive bribes may have more incentive to work harder. The impact corruption has on economic growth is then explored in the paper.

Five possible remedies were suggested including giving the BAC and CAG more power and authority so that they may carry out their responsibilities effectively. It is suggested by this author that the government needs to reflect on the impact that corruption is having on its country. Once the full extent is known it may push Bangladesh to pay more attention to its current bureaucracy and judiciary thereby increasing regulation.

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Endnote

i. Bangladesh has only been included in the CPI Index since 2001, and as such previous data is not available. At the time of writing, the dtat for GDP per capita was only available up to and including 2009.