The World Bank and IMF held their annual meetings last week, and it appears from the agenda that considerable attention was devoted to corruption—an encouraging sign that these organizations continue to treat this problem as both serious and relevant to their work. But does addressing the corruption problem effectively require that these organizations make more of an effort to quantify the problem? In a provocative post last week on Global Financial Integrity’s blog, Tom Cardamone (GFI’s President) and Maureen Heydt (GFI’s Communications Coordinator) argue that the answer is yes. In particular, they argue that the IMF should “undertake two analyses”: First the IMF “should conduct an annual assessment of grand corruption in all countries and publish the dollar value of that analysis.” Second, the IMF “should conduct an opportunity cost analysis of  stolen assets”—calculating, for example, how many hospital beds or vaccines the stolen money could have purchased, or how many school teachers could have been hired.
This second analysis is more straightforward, and dependent on the first—once we know the dollar value of stolen assets (or grand corruption more generally), it’s not too hard to do some simple division to show how that money might otherwise have been spent. So it seems to me that the real question is whether it indeed makes sense for the IMF to produce an annual estimate, for each country, of the total amount stolen or otherwise lost to grand corruption.
I’m skeptical, despite my general enthusiasm for evidence-based policymaking/advocacy generally, and for the need for more and better quantitative data on corruption. The reasons for my skepticism are as follows:
- First, measuring grand corruption (or, more narrowly, stolen assets) is extraordinarily difficult under the best of circumstances. The activities in question are criminal (even if in some countries the perpetrators have de facto impunity) and therefore generally secret. Even a well-resourced law enforcement agency like the US FBI would be hard-pressed to generate a reliable annual estimate of total stolen assets in its home country, let alone some other country. And the IMF is not a law enforcement agency. It cannot issue subpoenas or conduct forensic audits. Without a radical revamp of how the IMF operates—one that the member countries are unlikely to approve—I can’t see how the IMF could engage in the kind of data collection effort that Cardamone and Heydt seem to envision.
- Second, if the idea is not that the IMF will conduct its own investigations into financial crime, but instead use existing public data to estimate grand corruption levels, then I think it’s worth emphasizing that we’ve been down this road before, and the results are not encouraging. The existing data is so poor, and the extrapolation methods so dubious, that these sorts of attempted “quantification” are not much better than wild guesses. (See, for example, here and here.)
- Third, I’m not convinced that numerical quantification (especially if it takes the form of a wild guess) is really essential, or even all that helpful, for either advocacy or policymaking in this area. This is an issue I’ve previously discussed on this blog, and I don’t want to repeat myself at length here, but the basic idea is that there are ways both to demonstrate the magnitude of the problem, and possible causes and consequences, without a precise (perhaps misleadingly precise) dollar value attached to the harm. We already know that corruption is a big problem, and we have ways of plausibly identifying the countries where the problem is likely to be especially bad. While Cardamone and Heydt cite the “business adage” that “if you can’t measure it, you can’t manage it,” this adage—like many such adages—is more pithy than true. This is especially so in those contexts where the goal is to call attention to the urgency of the problem than to fine-tune the managerial response. And sometimes the attempt to produce precise quantitative estimates of what are really wild guesses can do more harm than good.
- Fourth, the attempt to gather this sort of data—for all countries every year—would be extraordinarily resource-intensive, and if attempted might well crowd out resources for other analytic and data-gathering work on corruption’s causes and consequences. It seems to me that the IMF in particular should dedicate its resources to analyzing how to address corruption in countries where misgovernance poses a threat to macroeconomic stability (which, after all, is the IMF’s main mission), rather than, say, trying to calculate the total amount lost to grand corruption in places like Sweden and Canada and Japan each and every year.
To be clear, I am in complete agreement with Cardamone and Heydt’s conclusion that, “Among the tasks at the top of her priority list, the new IMF Managing Director should commit herself to stemming the suffering of people resulting from the avarice of their leaders.” My respectful disagreement is only with the proposition that an annual country-by-country quantification of grand corruption is the best way for the IMF to use its limited resources to achieve this laudable goal.