Corruption and Inequality in Asia

Abstract

There is a strong correlation between various measures of perceived or experienced corruption and measures of economic inequality across countries. Existing cross-national studies have found a significant effect of corruption on inequality and poverty as well as a significant and strong effect of inequality on corruption. There seems to be a strong reciprocal causal relationship between corruption and inequality, implying a vicious cycle of inequality and corruption.This general cross-national pattern is confirmed among Asian countries as well. Countries with the most successful economic development records in Asia, such as Japan, South Korea, and Taiwan, share the common historical experience: sweeping land reform post-World War II dissolved the landed elite and created exceptionally equal distribution of income and wealth. These countries also showed significantly lower levels of corruption, with more meritocratic and professional bureaucracies and less clientelistic politics, than those countries that failed to reduce high inequality. This comparative historical evidence indicates that it is possible to cut the vicious cycle of high inequality, high corruption, and low human development.