CPAs (or Chartered Accountants) for political change
Tyler Cowen, professor of economics at George Mason University, reviewed a new book by economist Paul Collier that suggests that setting up transparent accounting as an international standard might bring about democratization.Is the idea realistic? Or is the economist's view of politics (and economics) holplessly naive? How would your students evaluate the proposal?
A Way for Resource-Rich Countries to Audit Their Way Out of Corruption
"It is unfortunate that economists have to debate whether natural resources are a blessing or a curse for a developing nation. Minerals, diamonds or oil may appear to represent automatic wealth but resource-rich countries usually become mired in corruption. High oil revenues, for instance, allow a government to maintain power and reward political supporters without doing much for its people. The government of Nigeria has taken in billions from high oil prices, yet the average person was probably better off 40 years ago..."The solution is to make these governments more accountable... but how can that be done? Paul Collier, an economics professor at Oxford University, has a new and potentially powerful idea. In his recently published book, The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It, Professor Collier favors an international charter — some widely publicized guidelines that countries can voluntarily adopt — to give transparency in spending wealth from natural resources. A country would pledge to have formal audits of its revenues and their disposition...
"Professor Collier’s proposal at first glance seems toothless; a truly corrupt country probably wouldn’t follow the provisions of the charter, which, after all, is voluntary. Yet citizens could pressure their government to follow such a charter, and the idea of the charter would create a focus for political opposition and signify international support for concrete reform.
"Foreign corporations would bring further pressures to heed the charter. Multinational companies that are active in corrupt countries might receive bad domestic publicity...
"Revenue audits would limit politicians’ ability to rake off funds for personal use or take bribes to give foreign companies a sweetheart deal. As it stands now, citizens of poor countries usually have no idea how much natural resource wealth is being generated or where that money is going...
"Even more promising is that Nigeria, one of the most corrupt countries, enacted a revenue transparency provision into law, as of May 28. The new Nigerian law relies too heavily on the federal government to monitor revenues, thereby reminding us of the old adage about the fox and the henhouse. Nonetheless, state governors opposed the measure strongly, which is a sign it may prove to have teeth. Furthermore, Nigeria did allow an audit by a private company in 2006, and it allowed the significant discrepancies to be publicized. The country may or may not turn the corner, but there are pressures building for greater rule of law...
Labels: democratization, economics, Nigeria
posted by Ken Wedding @ 7:38 AM
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