Public Finance and Public Procurement suffer from probable (or real) corruption when the special interests of Agents (state employees and/or private corporations) are expected to impose costs on (or materialize against) the general interest of the Principal (the voter, the public).
Corruption inhibits Foreign Direct Investment and increases the cost of public financing.
On the other hand, "collusion and corruption are distinct problems within public procurement, yet they may frequently occur in tandem, and have mutually reinforcing effect. They are best viewed, therefore, as concomitant threats to the integrity of public procurement".
"The distinctiveness of public procurement and its context makes the process particularly vulnerable to collusion and corruption, while also increasing the magnitude of harm that these offenses cause".
Tackling collusion and corruption are not mutually exclusive goals, so there is a need to accommodate both in order to better protect the public procurement process."
See OECD (2010):
Download here (from ADN@+ site):
Or here (from OECD site):
THE CORRUPTION GAME
Corruption comes from an Agent-Principal Game: The agent creates corrupt rents for his group by capturing productive rents that have to be offered via taxes by other groups in society.
The game is one of "rent capture" by non-institutional use of public funds that sooner or later will have to be paid by the principal as public debts (loss of principal and interest of savings, plus costs of principal and amortization of debts).
Corruption creates capture of statal rents and privatization of costs via poverty: when financial interests become part of taxes (e.g. VAT) to be paid by the middle class and the low class in order to finance "special interests" corrupted groups in power.
The perception of corruption that a country has, after events of probable or real corruption (expected of materialized ones) is measured by international agencies, creating a map of self-perceived corrupted countries that will charge high taxes to its citizens and to foreigns who are interested in investing or working there:
Becoming an adherent to The Organization for Economic Cooperation and Development (OECD) and its initiatives (e.g. "Anti-Bribery Convention") can help countries progress in the CCI (Corruption Control Indicator) as a means to reduce poverty via production and access to better and higher capital for creating opportunities for efficient land usage, and employment.
Established by the WORLD BANK, the Control of Corruption Indicator (CCI) "captures perceptions of the extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as "capture" of the state by elites and private interests. Countries are rated based on their governance capacity, where 0 signifies the weakest governance and 100 the strongest. This is an aggregate indicator combining views of a large number of enterprise, citizen, and expert survey respondents, and is part of the Worldwide Governance Indicators. The WGI project reports aggregate and individual governance indicators for 215 economies over the period 2010-2014, for six dimensions of governance: voice and accountability, political stability and absence of violence, government effectiveness, regulatory quality, rule of law, control of corruption".
All these issues are under debate in the world but are especially sensitive issues in America as a continent, as a matter of the new times of relativism and post-truth; nevertheless, this is an old phenomenon, as ancient as the state itself. For that, on 14 December 1960, 20 countries originally signed the Convention on the Organisation for Economic Co-operation and Development. Since then, 18 countries have become members of the Organization.
There are only 8 American and Iberic countries that are members of the OECD:
CANADA 10 April 1961
UNITED STATES 12 April 1961
SPAIN 3 August 1961
PORTUGAL 4 August 1961
MEXICO 18 May 1994
CHILE 7 May 2010
COLOMBIA 28 April 2020
COSTA RICA 25 May 2021
Becoming a Member of the OECD is not a simple formality but is the result of an increasingly rigorous review process. "The OECD Council, which comprises all the Members of the Organisation, decides on the opening of accession discussions, and considerations to open an accession process can be made on the initiative of the Council itself or upon receipt of a written request by a country interested in OECD membership".
An accession roadmap is then adopted by the Council, setting out the terms, conditions, and process for accession.
This roadmap "lists the technical reviews to be undertaken by OECD committees in various policy areas in order to evaluate the candidate country’s willingness and ability to implement relevant OECD legal instruments, as well as its policies and practices compared with OECD best policies and practices in the corresponding policy area".
This often results in a series of recommendations for change to align the candidate country further to OECD standards and best practices.
"Once the technical process is completed, the OECD Council makes a decision on inviting the candidate country to become a Member. An Accession Agreement is signed and the candidate country takes the necessary domestic steps and deposits an instrument of accession to the OECD Convention with the depositary. On the date of deposit, the country formally becomes a Member of the OECD".
The most recent countries to join the OECD were Colombia, in April 2020, and Costa Rica, in May 2021. On 25 January 2022, the Council decided to take the first step in accession discussions with six candidate countries for OECD Membership – Argentina, Brazil, Bulgaria, Croatia, Peru, and Romania.
The BRICS (without Russia)
The OECD works closely with some of the world’s largest economies: Brazil, China, India, Indonesia, and South Africa, who are OECD Key Partners (BRICS countries, except Russia).
They participate in the OECD’s daily work, bringing useful perspectives and increasing the relevance of policy debates. Key Partners participate in policy discussions in OECD bodies, take part in regular OECD surveys, and are included in statistical databases.
That is key for receiving Foreign Direct Investment and liberalizing for liberating countries from the special interests of mafia groups that dominate the public and inhibit the principals' public interest, as agents of the state (a captured and failed state).
Working away from Russia and its former URSS zone of influence is explained due to the difficulties those territories confront overtime after socialism (see table and graph above).
Latin America, Ecuador and OECD
The Development Center of the Organization for Economic Cooperation and Development (OECD), accepted on Tuesday, May 21, 2019, Ecuador's request to be part of this instance. The Ecuadorian Government presented the request to be a member on March 12, 2019, three years ago.
"Dominican Republic, Ecuador, El Salvador, Guatemala, Panama, Paraguay, and Uruguay, are members of the OECD Development Centre and LAC Regional Programme Steering Group (in addition to Honduras)". Honduras now has changed policies and accepts other influences from economists that have worked for Russian media. Let's hope Ecuador and other Latin American countries continue the effort against a Russian model as we see today in Ukraine's actions, and in favor of tackling transparency and sustainable development, now, in 2030, and further.
ROBERTO SALAZAR
HEXAGON GROUP /ADNPLUS
RED SANTA CRUZ /IMPACT INVESTMENT
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