Ethical Business, Corruption and Economic Development in Comparative Perspective

This chapter contextualises the drivers of corruption in Turkish business through comparisons with Japan and India in the late 19th century. It identifies the developmental state as a common driver of corruption. Catching up by using extensive state intervention had the major downside that it has served to facilitate corruption. The operation of the developmental state may have been constrained by factors beyond the control of the state, such as shortage of funds or external pressures. Yet it is apparent that the individual measures that made up the overall strategy of the developmental state are vulnerable to exploitation by those who are involved in their implementation, while at the same time positively encouraging such manipulation. The example of 19th century Meiji Japan suggests the building of inclusive political and economic institutions. Consequent trust levels can help address the problem, but it also suggests that old habits die hard and that respect for the state and its institutions is something that cannot be taken for granted. The fact that some places, such as Singapore and Hong Kong, were able in recent decades to roll back corrupt practices is less comforting for Turkey. Turkey, like India, has not yet taken the necessary steps needed to disrupt corrupt practices. However the chapter also explores the many uncertainties surrounding the issue of corruption. The very term corruption is ambiguous, because there are many grey areas that result from variations in cultural norms. The existence of corruption does not appear to stop development. It did not stop Japan’s economic growth over the long term. It has not stopped India’s rapid growth in recent decades, which appears, if anything, to correlate with growing corruption rates since the 1970s. It would appear, though, that the more extractive the institutions of a society, and the fewer the countervailing forces of productive business enterprise, the more potential there is for negative outcomes. In the case of Turkey, corruption has not only prevented significant economic growth, but it also had negative consequences, such as poor quality building construction, and distortions, such as helping one sector of the business community grow at the expense of others. Its prevalence maybe part of the explanation why Turkey has struggled to build innovative businesses able to drive forward the development of the country and break out of the middle-income trap.