Kalle Moene and Tina Søreide (2015)
Draft paper for Susan Rose-Ackerman and Paul Lagunes (Eds). 2015. Greed, Corruption, and the Modern State Essays in Political Economy, Edw. Elgar Publishing
Fashions come and go in the development community. When a policy idea becomes popular, some governments implement a cosmetic variant of the policy. What looks like development, are institutional façades; pretty from the outside, ugly from the inside. A good governance façade can be introduced deliberately to mislead observers and stakeholders to cover political theft. An example from the past is development planning, introduced with good intentions but sometimes exploited as a cover for corruption. In the 1960s donors rewarded developing countries that introduced five years plans by offering more aid. Recipient governments were therefore tempted to come up with cosmetic plans to satisfy foreign donors rather than the needs of their citizens. With recipient governments appearing to follow the suggestions from development experts, the donors raised few questions about their actual performance. Accordingly, it became possible for recipients to appropriate aid money for personal enrichment without facing reactions from the donor community.
Another example is the donor community’s demand for privatization in 1980s and 1990s. In some cases cosmetic privatization led to unhealthy reductions in the provision of public goods rather than to healthy market orientation. Both the downsizing of government and the sale of underpriced assets to friends and allies, made it possible for the elite in some countries to grab more rents. This is why many privatization programmes in retrospect are seen as failures, despite the benefits associated with well-functioning markets.
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