You might remember a recent Carolina Journal Radio interview in which Troy University economist Scott Beaulier noted the importance of the rule of law and property rights in promoting economic growth.
Fortune columnist Geoff Colvin covers similar ground in a new column decrying the negative influence of corruption in developing economies:
[W]hile the media and Wall Street focus on more tractable issues like inflation and exchange rates, world leaders seem perfectly clear on the greatest threat to the future of the BRICs and other emerging economies. Corruption is the “biggest threat to China,” Premier Wen Jiabao told the National People’s Congress in March. When U.S. Vice President Joe Biden visited Russia recently, he cited corruption as the No. 1 impediment to better economic relations and pointedly mentioned Sergei Magnitsky, a lawyer who died in custody in 2009 after accusing the police of corruption. …
… The societal effects are subtler and arguably worse. Initiative and ambition shrivel: Why try hard when effort isn’t the source of success? Respect for authority evaporates. Anger and resentment build, especially as a society becomes richer and the gulf between ordinary citizens and the officially tolerated crooks grows wider. …
… Still, reform is extraordinarily hard, he says, especially in big economies where “huge stakes are on the table.” Reform “can degenerate into political payback” by the reformers. Where to begin? “One of the best predictors of whether a society will do well on corruption is the strength of property rights,” Johnston says. “That’s not a bad place to start.”
