India and Pakistan are two separate countries. But they have a common problem: corruption.
The problem is getting worse under two celebrated Prime Ministers, Narendra Modi in India, and Imran Khan in Pakistan. That’s according to a recent ranking published by Transparency International.
India ranks 80th out of 180 countries listed. That’s two notches below the 2018 ranking and four notches down from 2014 when Modi became Prime Minister.
Corruption under Prime Minister Modi includes a wave of high-profile scandals that shook his administration during his first term in office. Like a muddy 7.8 billion euro weapons contract to purchase 36 Rafale jet fighters from France. And a $2 billion bank fraud uncovered at India’s state-owned Punjab National Bank.
Pakistan ranks 120th, three notches below the 2018 ranking when Kahn became Prime Minister.
Corruption in Pakistan under Prime Minister Modi includes high profile cases like one of the Khan’s cabinet members who kept Rs465 millions of properties in his servant’s name.
Both leaders have made fighting corruption central to their re-election campaigns, promising to clean up this old vice from their respective countries.
And they have taken measures to follow through with their promise.
Modi, in particular, has gone as far as to launch unconventional means like getting rid of “black money,” ie, the 500 and 1000 rupee notes.
Khan has launched measures to fight tax evasion and corruption.
However, the Modi and Khan governments have been fighting corruption in the wrong places — among their countries’ poor. And they have left corruption thriving in the high areas, among the rich and powerful.
Persistent corruption is one of the old vices of frontier and emerging markets. It creates monopolies and oligopolies in critical economic sectors, limiting competition and raising the prices for necessary products consumed by the masses.
Higher prices for necessities, in turn, fuel runaway inflation, another vice of frontier and emerging market economies, which is followed by social unrest, the third vice of these economies.
All three vices prevent emerging economies from achieving sustainable economic growth, and from spreading the benefits of economic growth from a narrow elite to the masses.
Sadly, the Modi and Khan administrations confirm the hypothesis that populist regimes of all kinds and sorts come to office with a promise to get rid of corruption. But all too often they embrace the existing situation they embrace once in office.
This has been thoroughly argued by Daron Acemoglu and James A. Robinson in Why Nations Fail: The Origins Of Power, Prosperity And Poverty.