Studying Corruption in Indonesia

Ahead of a seminar by Elizabeth Pisani at the School of Oriental and African Studies I have been watching a talk Pisani gave at the Dangerous Ideas Festival in Australia. A major theme of the argument is that some forms of corruption are worse than others. In particular ‘extractive’ corruption (e.g. official pocketing funds intended for government services, then stashing it in a bank account in Singapore) being more harmful and less socially acceptable than ‘distributive’ corruption (e.g. pulling in a favour with a friendly/related official to help speed up the slow moving wheels of bureaucracy).

Whilst I can see some problems with the line of argument that Pisani takes, I certainly take the argument that all corruption is not equal. This got me thinking about another distinction, that between centralised/regulated corruption and decentralised/deregulated corruption. David Enweremadu gives an interesting examination of this theme in his article ‘The impact of corruption on economic development, comparing the experience of Indonesia and Nigeria, (1967-1998)’ in Asian Tigers, African Lions. Here he makes the case that centralised corruption under Suharto helped facilitate economic growth in comparison to the more chaotic kleptocracy of Nigeria. Although Fuady and Henley find the main causes of the economic divergence between the two countries elsewhere, I can see a certain logic that a regularised system of corruption (where at least you know who to bribe to get things done and how much it costs) could be more conducive to growth than a more chaotic one that produces uncertainty for both businesses and citizens.

This all got me thinking about how we measure corruption. I came across a very useful summary of approaches to measuring corruption, including a useful critique of the much publicised corruption indices, that generally rely on survey data, itself open to various biases. Additionally the article indicates some of the more innovative approaches using accounting, direct observations and field experiments. Moreover, one of the pioneers in this field has been Benjamin Olken, much of whose work has focused on Indonesia.