Monday, 3 June 2002
http://www.azstarnet.com/star/today/20603CORRUPTION2fpmb2fgc.html
The cost of corruption
More than 13,700 Mexican citizens were polled about 38 services, from visiting someone in the hospital outside visiting hours to the paperwork involved in getting phone service. The survey, by Transparencia Mexicana, an affiliate of Transparency International, found:
214 million corrupt acts in the use of public services in Mexico were reported during one 12-month period.
On average, bribes and other corruption-related financial penalties cost each Mexican household $109. That adds up to 23.4 billion pesos, or $2.4 billion in bribes annually.
About 6.9 percent of the average household's annual income goes to pay bribes. One-income households spend 13.9 percent of their annual income on such bribes or other "penalties."
Of Mexico's 31 states plus the Federal District of Mexico City, Sonora was found to be among the least corrupt, while Mexico City was found to be the most corrupt.
Ranking corruption
The Corruption Perceptions Index, issued annually by Transparency International,
summarizes numerous polls of academics, businesspeople and analysts to measure
perceived corruption. Last year's report drew on 14 surveys from seven independent
institutions.
Among its conclusions:
On a scale of 1 to 10, with 10 being the least corrupt and 1 being the most
corrupt, Mexico ranked 3.7.
Finland was considered least corrupt, with a score of 9.9, and Bangladesh was considered most corrupt with a score of 0.4.
With a No. 1 ranking indicating minimal corruption, Mexico ranked 51st of 91 countries. The United States ranked 16th.
Obstacle to trade, foreign investment
By Paola Banchero
ARIZONA DAILY STAR
GUADALAJARA, Mexico - It's the national sport, Mexicans say jokingly.
It's not soccer. Or bullfighting.
Mexicans don't flinch to call it by its name: corruption.
When Vicente Fox came to power in December 2000, Mexico began a period of self-examination and reform that may alter its economy, its culture and its relationship with its neighbor to the north. Central to that movement is an effort to eliminate - or at least cut down on - corruption.
Experts say corruption hurts countries' ability to create a higher standard of living for their citizens, creating a tax on development. High levels of corruption discourage foreign investment and trade, complicating the decision of Tucson entrepreneurs to venture across the border in pursuit of new markets.
"One of the biggest deterrents to these investors is the perception that the system is biased against them, i.e., there is not a level playing field when the interests of U.S. investors are in conflict with powerful Mexican competitors who can manipulate the system in their favor," said Tucson lawyer Mark Raven, who represents U.S. investors in Mexico.
"Many major investors believe the conventional wisdom that it is foolish to do business in Mexico unless one has a well-connected Mexican partner."
First reform measure passes
Mexicans are trying to fight corruption on the institutional level as well as on a personal level. Reform measures meant to make the government more transparent, opening it and other institutions to greater public scrutiny, are slowly getting a hearing.
The first reform passed in the Chamber of Deputies - the equivalent of the U.S. House of Representatives - and the Senate in April. The Federal Law on Transparency and Access to Public Information allows citizens to obtain information about the government that was off-limits before. The law, though, falls short of what citizen groups had wanted. And most of Mexico's 32 states have yet to pass legislation that would enable the public to scrutinize state and local government.
"This is only the first step to making a system that citizens understand and can penetrate," said Luis Carlos Ugalde, a faculty member at the Economic Research and Education Center in Mexico City who studies the causes of corruption and its impact on economic growth. "But it's a necessary step if we are to become more of a first-world nation with a first-world economy."
Anti-corruption efforts also have a human side, as Mexicans examine the causes of corruption. One visible outcome of this soul-searching is a public awareness campaign created by nongovernmental organizations. On Lopez Mateos Avenue, in Guadalajara's financial district, public service ads reinforce the anti-corruption message. They show a baby's outstretched hand, palm up, as if his fortune is being told.
"Here, where does it say you will be corrupt?" it reads. "It depends on you."
Young office workers also display a brochure in their cubicles that reads, "Ya no más mordidas," or "No more bites." La mordida - the bite - is the Mexican expression for bribery.
Bureaucracy also a hindrance
Among the 30 member countries of the pro-free-market, pro-democracy Organization for Economic Cooperation and Development, Mexico is considered the most bureaucratic - the one where it takes the longest to complete the paperwork before opening a business. It is also the second-lowest in terms of gross domestic product, the broadest measure of a country's economic growth.
In terms of its level of corruption, Mexico also ranks behind fellow Latin American countries such as Peru and Chile, according to Transparency International, a nonprofit group that promotes accountability and transparency - the ability to see what the public and private sectors are doing.
It's essential to international trade and investment that countries be as transparent as possible, said University of Arizona law professor Boris Kozolchyk, in a study of banking practices in five Latin American countries.
Globalization makes it necessary for all who wish to sell, buy, lend or borrow in a worldwide marketplace of strangers to deal honestly, or the system breaks down, said Kozolchyk, the president of the Tucson-based National Law Center on Inter-American Free Trade.
"Corruption is a kind of tax"
No one knows how much of Mexico's corruption problem is from individuals bribing government agents - paying authorities to speed up the long business-licensing process or paying off a customs officer on the way back from a shopping trip across the border, for example - and how much is white-collar crime, such as banks' laundering drug-tainted money.
"In either case, corruption is a kind of tax on the Mexican people," said Miguel Angel Montoya Bayardo, an economics professor at the Monterrey Institute of Technology and Higher Learning, which has a campus in Guadalajara.
"When things function normally, a tax is transferring part of the wealth of the private sector to the public sector for some social good. But where corruption thrives, it's transferring wealth from one private individual or company to another private party, but without the social benefit."
Bribery loosens red tape
Following the rules has a high cost, Montoya said.
"You wind up paying in terms of time wasted. If you simply pay the bribe, things go more efficiently for you and your business."
That's why Mexico has to strike a balance between a system with a lot of rules - like Western Europe - or fewer rules - following a model more like Hong Kong's. Western Europe, with its focus on economic unity, makes countries stick to national laws as well as those of the European Union, while Hong Kong became an economic powerhouse under British rule through its laissez-faire business policies.
"The more paperwork and hoops you have to jump through before doing your business, the greater the chance that corruption will flourish in that environment," Montoya said. "What we need is a government that doesn't disappear but is more agile and transparent than what we have now."
* Star reporter Paola Banchero is on assignment in Mexico.
Back to Story
--------------------------------------------------------------------------------
All content copyright © 1999, 2000, 2001 AzStarNet, Arizona Daily Star and its wire services and suppliers and may not be republished without permission. All rights reserved. Any copying, redistribution, or retransmission of any of the contents of this service without the expressed written consent of Arizona Daily Star or AzStarNet is prohibited.