Social Implications of Corruption in Developing Countries: Case Study of Pakistan and India

Corruption is a multifaceted phenomenon that exists in every society in different forms. Complete elimination and detection of corruption is hard and expensive because of its blatant existence. However, the historical and cultural background of countries does contribute to the intensity of corruption. Klitgard (1988) argues that corruption is prevalent in a monopolistic system where one party has control over certain goods and services and holds power to decide to whom and how much of these goods and services are to be given. In such cases, inequality prevails. Arora (2009) finds out that the poor class of society suffers from inequality where the poor further weaken and are unable to hold the rich accountable for corruption. Since corruption is deeply rooted in developing countries, very little attention has been given to it by politicians. Also, the issue of corruption has not been considered as serious as it should be. No demanding course of action has been mobilised against corruption.

In our paper, we find answers for the following research questions:

What are the human rights implications of corruption in developing economies?

The countries chosen for this paper are Pakistan and India because according to the Corruption Perception Index Report (2019), these countries are perceived to be the most corrupt ones. None of them secures a rank in the (at least) top 50 least corrupt countries. The reason why we chose these countries is that they have the same colonial legacy. They are path dependent; the phenomenon of ‘path dependence’ is defined as: ‘history does matter or past influences future’ or ‘path dependence is characterized by historical sequences where contingent events set institutional patterns or series of events holding deterministic properties’ (Mahoney 2000). Moreover, Sewell (1996) defines path dependency as whatever had occurred in the past carries effects on the future happening. Nevertheless, since then, the colonial impact has been prevalent in the institutional and political structures. Today, the above-mentioned economies are undergoing social, economic and political chaos; the reasons could be many, but the endemic level of corruption is the primary one and is enormously path dependent (Angeles and Neanidis 2015).

The research employs a systematic literature review (SLR) method. A systematic review is a particular methodology which identifies currently available research, selects and assesses contributions, analyses and synthesises data and presents pieces of evidence with a justified conclusion.

First, through a systematic review of literature, we define the term corruption and seek its consequences in developing countries. Moreover, we focus on and evaluate the social (health and education) implications of corruption in developing countries. The criterion to choose countries for this research is based on ‘similar historical legacy’ of both countries. Secondly, we link the divergence of public investment in the social sector and low human development with corruption. Lastly, we analyse policy recommendations for curbing corruption in developing countries.

Corruption carries adverse effects on all aspects of a society, be that social, political, economic or cultural. For instance, Leff (1964), Huntington (1968), Acemoglu and Verdier (1998) and Gründler and Potrafke (2019) researched the economic implications of corruption. Moreover, Adsera et al (2003), Le (2003), Park (2003) and Pellegerini and Gerlagh (2008) explain the relation between corruption and political instability. Drapalova et al (2019) describe the negative effects of corruption on democracy. However, less attention has been given to social implications of corruption with respect to human rights in particular, though corruption violates human rights directly or indirectly. Therefore, the main objectives of this research are to explain the relation between corruption and social human rights (health and education) through an SLR, and to explain how corruption diverts public spending from social capital projects specifically and to identify the theories that seed corruption, in general, and finally to suggest policy recommendations to combat corruption.

This paper discusses both direct and indirect links between corruption and human rights violations. For instance, Gupta, Davoodi and Tiongson (2000) discuss the direct links between corruption and human rights. They argue that corruption can violate basic human rights (education and health) particularly in two different ways: either the cost of services can be increased, so that the disadvantaged individuals cannot afford them, or the quality of services can be reduced by corruption. Similarly, Ackay (2006) and Terme and Mauro (1998) explain the indirect links between corruption and human rights. They argue that corruption diverts public spending from human developmental projects to capital-intensive projects (discussed below) which leads to low level of health and education facilities. Such an underinvestment in the social sector ends in violation of basic human rights. Therefore, an ordinary person of a state does not demand a lavish life, but instead demands for basic needs of life from the people in power (Fuhr 2013).

The Universal Declaration of Human Rights (1948) comprehensively defines human rights. In this paper, we include articles of Universal Declaration of Human Rights (UDHR) that define human rights in regard to social protection (health and education). All human beings are born free and equal in dignity and rights. They are bestowed with morality and should act towards one another in a spirit of brotherhood (Article 1). Moreover, all human beings are entitled to have equal access to public service in their country. Everyone, as a member of society, has the right to social security including health and education for the well-being and development of her/his personality (Articles 21, 22, 25, 26). In this paper, we investigate the implications of corruption on human development, that is, health and education in particular. As Sen (2005) argues, the concept of human rights and human capabilities go well with each other. Sen (1998) goes on defining development as ‘freedom-the process of expanding real freedom that people can enjoy in a society’. Health and education are believed to be important factors that freedom rely on. Miletzki and Broten (2017) argue that the availability of health and education facilities is among the most important factors that human development is based on.

The problem of corruption has been dealt with by a number of authors (see, e.g. Ackerman and Søreide 2011; Caiden and Caiden 1977). The simplest definition of corruption is as follows: corruption is characterised by the abuse of a public position for self-enrichment (Nye 1989). Jansinc (2019) defines corruption in the following way: ‘Corruption is a complex social activity in which money, goods, or other resources that belong to a public organization are exchanged or transferred covertly in a way that benefits particularistic actors instead of the organization or the general public’.

Based on the synthesis of available literature, the definition and categorisation of corruption are presented in Table 1.

However, definition and indicators of measuring corruption depend on the dimension that is being analysed since it is a multidimensional phenomenon. This is the reason why finding one universal definition of corruption is difficult. Yet, there is a broad consensus among the scholars on the definition of corruption; they define corruption as the ‘misuse of public office for personal or private interest’ (Plaček 2018). This definition is supported by principal-agent theory, where the agent is probably a public official holding discretionary power while principal refers to an individual who seeks public goods and services. The arrangements between an agent and a principal are strategic and inevitable, given the situation where the agent misuses the given authority for personal interest while the principal is in need. Yet, the principal is hesitant to report the abuse because of the high monitoring cost (Groenendijk 1997). The International Country Risk Guidance data underpins that the principal-agent definition of corruption fits in potential corrupt cases, for instance, nepotism, bribery, extortion of money and close personal relations among politicians and business tycoons (Arestis and Caner 2010).

Moreover, corruption has been mainly classified into two main kinds. The first category is grand corruption where top-level bureaucrats or politicians are involved. Grand corruption refers to a situation where politicians are involved in a public-private partnership involves a considerable amount of payments and outcomes that affect all (Mashali 2012). The second main category of corruption is petty corruption, where street-level bureaucrats are involved with citizens in taking bribes for providing different public goods and services (Ariane et al 2007). Petty corruption indicates the magnitude of payment given or received, but not the overall impact of it on the government policy (Scott 1972). There are multiple kinds of such corruption; it can be in any form, starting from utility bills to public sector contracts (Kochanek 1993). Petty corruption is a gateway to grand corruption because it creates opportunities for grand corruption (Mashali 2012).

The research focuses on the social implications of corruption in emerging economies. For this research, two countries, that is, Pakistan and India, have been selected. According to the Transparency International report (2019), these economies are in the cluster of the most corrupt countries in the world. Systematic reviews are based on a continuum from knowledge-building and theory-generating to aggregating and summarising (Finfgeld-Connett and Johnson 2013). SLR has obtained importance in multiple fields, including public policy. To include unbiased search techniques for the identification of relevant articles and ensure objectivity and transparency, this systematic review was conducted in accordance with PRISMA protocols (Liberati et al 2009; Petticrew and Robbert 2008). The identification of analytical studies related to corruption in developing countries is premised on the following.

Gathering of relevant studies: This research follows PRISMA-P (2015) to identify relevant studies from journals, book chapters and well-renowned authors from different fields of studies, for instance, corruption, human rights, human development, political science, economics, sociology and political economy. Subsequently, an inventory of the articles was formed. This inventory aimed to have a collection of the most recent studies related to the topic; also, such a collection helps to increase the count of keywords. An Excel sheet was created to manage data and records for reviews. Moreover, relevant literature was studied from bibliographies of reviewed articles. The reviewed literature aimed to identify the social implications of corruption in transition economies.

The search strategy was premised on keywords; approximately 20 keywords and synonyms were taken into consideration to identify relevant articles. A dataset was formed for the assessment of articles’ quality in the field of corruption and social human rights (Pahlevan Sharif et al 2019). Additionally, countries’ names, which are being researched in this article, were also part of the search strategy. Google Scholar and Web of Sciences were the main search sources for using relevant concepts to locate applicable studies; majority of the studies were from peer-reviewed journals, for instance, JSTOR and Elsevier. Moreover, reports from databases, such as World Governance Indicators, World Bank, World Health Organisation and World Economic Forum, were also utilised to critically analyse health and education indicators in these developing countries (see Table 2).

Screening phase: As mentioned above, an inventory of articles, based on the techniques of Ugur and Dusgupta (2011), was created. The main objective of this inventory was to store all the downloaded articles, which helped in the screening phase. Titles and abstracts were screened by independent reviewers; however, papers relevant to the risk of bias were excluded. Moreover, to extract the data, a pilot test of 30 randomly selected papers was done for obtaining and confirming the data in accordance with PRISMA-P (2015). Approximately 208 articles were downloaded; the turnout of relevant articles was 160 during the first phase of screening. Studies relevant to the topic and its objectives were included according to the selection criteria. However, during the second screening, the studies that were not relevant had been excluded. A total of 105 closely related articles (mostly academic articles in English) were considered and reviewed to achieve the objectives of this paper. After a review of relevant studies, it was possible to mention characteristics of the articles, such as the aim of the research, used data, methodologies, limitations and results.

RQnr 1: What are the human rights implications of corruption in India and Pakistan? Tables 3 and 4 showing systematic analysis of corruption with its dire consequences on health and education answer the above question for two different countries. However, more than 80% of the reviewed articles argue that corruption is one of the invincible reasons of people's dire social condition in India and Pakistan. The following results also identify the main factors contributing to the creation of a corrupt environment. Such factors include weak institutional structure, political instability, lack of morality, lack of political-will and colonial legacy.

Moreover, a broad consensus exists among the scholars on the fact that corruption diverts public investment from the social sector to capital-intensive projects. Policymakers tend to invest in projects that give monetary benefits in the form of bribes and kickbacks. Such divergence of public investment ends up in low human development, which in turn affects the social human rights of citizens. For results, see Tables 3 and 4.

RQnr 2: What are the policy alternatives to curb corruption in developing countries?

Considering the filthy consequences of corruption, policies to curb corruption have long drawn attention. However, prevalence of the problem in developing countries and the lack of implementation of anti-corruption laws make it challenging to overcome the issue of corruption. Countries’ institutional response is to mitigate corruption by establishing anti-corruption agencies; yet, the problem persists as a result of politicisation of institutions. In this article, we recommend and discuss the analyses of some anti-corruption policies; these policies include political accountability, technological advancement along with decentralised information systems, introduction of social audits and institutional reforms, which need to be implemented to curb corruption in developing countries.

As we discussed above, corruption lowers human development due to less investment in the social sector. However, Doig and Theobald (2000) believe that corruption ends up in taxing the poor, while Bardhan (1997), Lambsdorf (2007) and Murphy et al (1993) believe that it diverts investment from the social sector (health and education) which makes it easy for the corrupt individuals to digest public money. Table 5 contains anti-corruption policy analysis.

RQnr 3: What are the missing points of current research in the field of corruption in developing states? Investigating corruption is often based on quantitative researches, for instance, examining the effects of corruption on economic growth, citizens’ voting behaviour, etc. needs quantitative data. Therefore, research in the field of corruption is dependent on quantitative data. Similarly, this article reviews scientific studies on corruption in the health and education sector that are based on quantitative data. However, qualitative studies do not contribute much in this paper.

Due to the multifaceted nature of corruption, it exists in every society and every sector of an economy and affects all the dimensions of a society. Therefore, corruption has been investigated and researched from different perspectives. For instance, Mauro (1995), Mo (2001) and Jain (2001) reviewed corruption, growth and development. Peters and Welch (1980), McCann and Domınguez (1998) and Klašnja et al (2016) investigated corruption from the perspective of citizens’ voting behaviour. Moreover, Rotberg (2009) and Thachuk (2005) investigated corruption with respect to its global security and world order.

Corruption does not only instigate the issues discussed above, but also hits all aspects of a society. Where corruption has broadly been investigated from an economic and political perspective, little attention has been given to social issues occurring due to corruption in developing societies. In our research, we do not cover the entire social sector of developing countries; rather, we focus on health and education. Furthermore, the theoretical part of this paper classifies and discusses corruption in developing economies in general. However, the results are applicable for the investigated countries (Pakistan and India) only and not for all developing countries.

This paper shows that SLR has potential significance to identify and analyse social human rights issues related to corruption. Although systematic review methods have been used to analyse social, economic and political dimensions of corruption, for instance, impact of corruption on the health sector in Africa (Onwujekwe et al 2019), corruption in oil sector (Moisé 2020), effect of corruption on the quality of public delivery service (Molina 2017) and economic impact of corruption in low-income countries (Ugur and Dasgupta 2011). This paper, however, bridges the link between corruption and social human rights through an SLR. Moreover, this paper shows the intensity and threats posed by corruption to health and education sector in developing countries. Results identify factors such as lack of accountability and transparency, misallocation of public funds and protecting the interest of elites; however, such factors contributing to the rise of corruption in developing countries are specific to weak institutional structure. It is, therefore, important to educate all the stakeholders about violation of human rights by corruption and to present policy recommendations that can be helpful in curbing corruption. Furthermore, specific guidance should be given to all the stakeholders; for example, this systematic review shows how and why public spending on health and education can be diverted through corruption and how a state can reduce the level of corruption. Policy recommendations such as social audit may strengthen transparency and accountability mechanisms in developing countries.

Importance for Central European Journal of Public Policy

Central and Eastern European countries suffer from corruption, as Placek et al (2019, 2021), for instance, argue that post-communist countries such as Czechoslovakia and Bulgaria exhibit high level of corruption. These countries were a ‘scarcity’ society ruled by the citizens’ unsatisfied demand for goods and services that compelled citizens to pay bribes to public officials for gaining public goods/services. Such a situation further created a culture of ‘demand and supply of corrupt practices’ within the entire system of governance. This study offers different perspectives for developing countries in terms of comparison if there is any similar path. Therefore, it can be significant for readers and future researchers within the arena of corruption and human rights perspective from Central and Eastern European countries.

The issue of corruption has globally taken the pace of interest, but its alarming consequences have overwhelmed the developing world. Corruption affects countries’ social, economic and political dimensions. This paper focuses on the social sector; however, not covering the entire social sector is one of the main limitations of this research. It addresses the consequences of corruption on health and education, leaving room for future research on corruption with respect to its other social impacts. Also, this research does not analyse the political perspective, that is, political-will, which is substantially important to ensure the application of anti-corruption policies. Moreover, results identify the social problems exacerbated by corruption and provide policy recommendations. However, if such (social) issues are addressed and recommended anti-corruption policies are considered for implementation by the developing countries, it may help policy-makers to safeguard citizens’ social human rights and reduce the level of perceived corruption in developing world.

Furthermore, this paper concludes that corruption disproportionately affects social human rights (health and education). The empirical shreds of evidence of Monica et al (2019) show that corruption affects physical health, for instance, mortality and life expectancy rate. According to the National Academies of Sciences, Engineering and Medicine (2018), $445 billion out of $7.35 trillion that is globally allocated to the health sector goes missing every year. Corruption is globally responsible for 140,000 deaths of children below the age of 5. Reduced public spending, insufficient regulations and bad governance result in a low-quality health system. Good governance is significantly important to ensure the provision of sufficient healthcare system. Moreover, corruption in the education sector carries alarming consequences; thriving corruption in the education sector negatively affects societies, for instance, it results in fading trust, low educational quality, production of unqualified graduates and overlooking meritocracy. However, corruption is highly prevalent in the education system of developing countries. Educational corruption needs to be investigated due to its adverse effects in the society (Rumyantseva 2005).

As this study analyses human development (health and education) aspects of corruption consequences, it does not include the effects of corruption on justice and social care system in developing countries. Moreover, this paper reveals that implications of corruption on human rights should drive larger attention to the significance of addressing corruption issues within health and education. Methodologies such as SLR are underutilised to link corruption with human rights specifically. Therefore, I suggest to future researchers to examine the effects of corruption on justice and social care system and the role of civil society organisation in advocating human rights with respect to corruption, using meta-analysis of systematic review.