Summary of Reducing Corruption Takes a Specific Kind of Investment

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Corruption and extortion exist in every society but are more overt in emerging economies. Economists have long considered corruption a major constraint on economic growth and development. Nigerian innovation researcher Efosa Ojomo is turning conventional wisdom on corruption on its head. He explains that scarcity, not a dearth of laws and institutions, is responsible for corrupt behavior. His talk will inspire innovators and investors to view doing business in emerging economies in a new light. 

About the Speaker

Efosa Ojomo is a senior research fellow at the Clayton Christensen Institute for Disruptive Innovation.

 

Summary

According to conventional wisdom, poor countries need to stamp out corruption before they can develop.

In many developing countries, corruption is endemic. Politicians misuse their positions of power to steal riches from state coffers, while civil servants extort money from everyday citizens to subsidize their meager incomes.

Most development organizations view corruption as a major obstacle to economic development. Who, after all, would take the risk of investing in a country that’s poor and corrupt? Hence, development organizations and foreign governments have spent billions of dollars assisting developing countries with strengthening their laws and institutions. Yet these anti-corruption initiatives have been largely unsuccessful at spurring economic activity and reducing corruption.

Corruption is a product of scarcity. Only economic development can eliminate the incentive to engage in corruption.

Conventional...


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