Why is corruption so bad in Eastern Europe? And what can be done about it?
First off, I don’t know to what extent it can be reduced. According to the hbdchick’s theories on the Hajnal Line, ceteris paribus, Southern and Eastern Europe will always be more corrupt than the countries of “core Europe” because they did not undergo its centuries of selection for beyond- kin altruism.
Despite decades of institutional convergence under the aegis of European integration, Italy and Greece remain considerably more corrupt than Germany, Britainn, and Sweden. Poland has improved greatly since the 1990s, but reached an asymptote at around Italy’s level; Romania, at Greece’s. From the outset, this implies that Eastern European countries should keep their ambitions realistic, regardless of the policies that they choose to pursue.
Still, political economic factors do play a large role.
The main concept that I would draw upon is Mancur Olson’s distinction between “roving bandits” and “stationary bandits.”
In unstable polities, the elites can be replaced at any time, often through unpredictable and lawless methods such as coups, or “people power” driven “color revolutions” if the new gang are more pro-Western. The elites know this. As such, they have an interest in maximizing their thievery in the here and now, with corresponding disincentives to large, capital-heavy investments that will only pay in the long-term. Most likely, they will not be around to enjoy the fruits of their labor a decade or two down the line. But a Mayfair apartment and British Virgin Islands cash stash won’t go anywhere.
This describes Ukraine, and Russia in the 1990s.
In polities where the system is more stable, “roving bandits” start to settle down – they become “stationary bandits.” There are relatively greater incentives for long-term investments – if you steal less today, your pie will be greater tomorrow. Although corruption still exists, and may even remain systemic, the more predictable nature of the tariffs levied by “stationary bandits” enables corporations to account for them in their business plans. It’s not even so much the degree of corruption that’s important as its predictability. Furthermore, the bandits at the very top have greater incentives to clamp down on their underlings, since if they get start getting too greedy it will bite into their own profit margins. This in turn can pave the way for the emergence of institutions that can upgrade the war on corruption from manual to semi-autonomous mode.
This describes countries such as Russia, Kazakhstan, and Belarus. (China would also fall into this category).
industrialized-transition These ex-Soviet countries, ruled by “stationary bandits,” have been far more successful at economic recovery (and growth) than Ukraine. For all the “Gabon with snow” jokes, Ukraine is still an industrialized country with a well educated population and a respectable average IQ of perhaps 95, with considerable natural resources, access to the sea, and Russian gas subsidies that have totalled approximately $200 billion since independence.
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