draining development.pdf - Khazar University

The Practical Political Economy of Illicit Flows 467sheepish boss. The few jobs that exist are mostly offered by cartels. Thesecontrol imports, too. The need for new infrastructure is vast, but the priceof a 50kg bag of cement is three times higher than in neighbouring countries.Fighting cartels is hard. Customs officers are bent, hindering foreigncompetitors. Judges are easily bought. The police are, at best, ill-equipped.One in four cops exist only on paper: chiefs collect the extra pay.Nigeria is the leading oil producer in Africa, with a revenue stream ofabout $40 billion a year. The effect of this wealth is mostly corrosive. . . .Three-quarters of the government budget goes toward recurrent expenditure,including salaries. Parliamentarians are paid up to US$2m a year,legally. Very little is invested in infrastructure. State governors all receivebig slices of the oil pie. This has attracted some very shady characters intopolitics. 10Categorizing Contemporary Political JurisdictionsAt the end of the section titled “Perspective,” I suggested that it is usefulto think of the contemporary world divided into four categories of political(more or less national) jurisdictions. 11 Informed by the analysis inthe subsequent section of the impact of late 20th-century globalization,I explain in this section, in a little more detail, the differences amongthese categories that are most relevant to understanding the effects inpoor countries of illicit capital flows.OECD jurisdictionsThese are wealthy countries that have shared similar rates of economicgrowth for many decades and similar economic and political institutions.All are liberal democracies in which the historic compromisebetween capital and labor has held for decades and become almost naturalized.The compromise faces little fundamental political critique.Property rights are strong. Workers and consumers exercise considerablepower through electoral democracy, while controllers of capital continueto nudge and discipline governments through less visible channels:their autonomy either to refrain from reinvestment and, increasingly, torelocate in other jurisdictions (Winters 1994). Governments raiseincreasing proportions of gross domestic product (GDP)—now averaging40 percent (IMF 2011)—to meet the needs of voters for services and