Introduction
In a survey of which professions Russians consider the “most criminal,”
“ministers/politicians/civil servants” was a less common response than “policemen”, but more
common than “thief/ conmen/drug dealer/terrorist” (The Economist, October 20
th
2005). In one
year, in the Czech Republic alone, fifty-three multinational firms were banned from bidding on
World Bank projects due to previous corruption or fraud violations. Forty-five of the fifty-three
firms were from rich countries with strong anti-corruption norms such as the United Kingdom,
Japan, the United States, Canada or the Netherlands (Ministry of Finance of the Czech Republic,
2000). These anecdotes (and many others) suggest that corruption is clearly a problem in
“transition” economies and that this problem is not limited to home-grown enterprises.
The link between economic openness and corruption has been the subject of considerable
controversy. Those favoring neo-liberal economic reforms argue that not only will opening the
economy have the salutary effects of permitting greater investment, increasing competition to
improve the efficiency of domestic firms and encouraging an efficient distribution of resources,
but it will also “crowd out” corruption. Economic actors will demand anti-corruption reforms in
order to be able to compete in an open, international market; even without institutional reforms,
these actors will be forced to avoid the dead weight costs of corruption. Political elites will find
that cronyism and rent-seeking have higher opportunity costs in an open economy. According
to this argument, continuing problems with corruption are due to partial reform and the need to
further open the economy.
However, not everyone agrees. If goods do not move freely across borders (which is the
case except in free trade zones or customs unions), higher volumes of trade also create incentives
for bribe-seeking on the part of customs officials and for bribe-paying on the part of importers
and exporters. In addition, the characteristics of the business environment in these countries may
2
Convention