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Fighting Corruption with Economic Analysis

, by Fabio Todesco
The relationship between economic analysis and effective solutions to the problems posed by corruption are at the center of a seminar held by Leonardo Borlini at IMF and a book he wrote with the late Marco Arnone

Since the signing of the Agreement for Mutual Enforcement of Debarment Decisions (2010), when any of the five major multilateral development banks (World Bank, African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development and Inter-American Bank) debars a firm, an individual or a non-governmental organization, preventing them from participating in future projects financed by that bank, all five banks enforce the sanction, putting the debarred entity practically out of business. The Agreement is an effective tool to contrast corruption because it hits where it hurts more: the economic and financial side.

"Corruption presents many legal and regulatory challenges", Leonardo Borlini (Department of Legal Studies) says, "but these challenges cannot be met by law in isolation. In order to assess whether and how to regulate corruption, it is necessary to start with a thorough inquiry into the causes, institutional and social effects, and most of all, actual and potential economic and financial consequences of crimes".

The use of economic analysis in international law in order to tackle corruption is the topic of a brown bag seminar Borlini held on 14 January at the International Monetary Fund headquarters in Washington, D.C. and of a forthcoming book he has written with the late Marco Arnone: Corruption. Economic Analysis and International Law, Edward Elgar Publishing, 512 pp, April 2014.

Economic analysis, Borlini and Arnone argue, is also the key to measuring the efficacy of current anti-corruption instruments, and the book finds many existing legal counter-measures lacking. "Also in the Italian system, based on Law 231, monetary sanctions for legal entities are too bland in comparison to what happens in the US or UK", Borlini states.

In the light of the assessment of new international instruments and their domestic implementation and enforcement, and the monitoring mechanisms embedded by international organizations, the conclusion of the book is that there is a clear relationship between realistic economic analysis and effective solutions to the economic and legal problems posed by corruption.

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