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Rules and Culture: Corruption in Hong Kong

+ Paul Romer

According to Transparency International’s corruption index, corruption is “sticky.” Over time corrupt countries tend to remain corrupt, while clean countries remain clean. This makes it tempting to lean on cultural interpretations to explain the persistence or absence corruption.

Hong Kong provides a compelling counterexample, showing that a change in rules can defeat a culture of corruption. Though it once had high levels of corruption, comparable to those in mainland China in the 1970s, the British government was able to effectively banish corruption. In 1977, 38% of the population thought that corruption was widespread, by 1982 only 8% did.

The government’s initial attempt to fight corruption relied on a combination of an anti-corruption branch within the police force and a reduction in the prosecution’s burden of proof. For instance, the Prevention of Bribery Ordinance (1971) made it an offense to be in control of property unexplained by past income. However, since the police themselves were corrupt, relying on the police to investigate corruption proved futile.

After initial failures, in 1974 the governor general moved anti-corruption responsibilities to a new elite ministry: the Independent Commission Against Corruption (ICAC). The ministry was independent, directly responsible to the governor, well paid, and recruited from the civilian population. The public, confident in the new ministry’s independence, became much more cooperative in reporting instances of corruption.

Unsurprisingly, the ICAC’s efforts met with considerable resistance from the police. It was forced to grant amnesty for past crimes after a police strike protesting corruption prosecutions. The independent ministry was then free to use previously established anti-bribery rules to prosecute fresh cases involving corrupt police officers and officials. The ICACalso reviewed the rules of all ministries and modified them to reduce opportunities for corruption.

The new ministry also changed Hong Kong’s social norms regarding corruption. It organized a massive education campaign, adding anti-corruption classes to the public school curriculum, and creating anti-corruption television programming.

The Hong Kong governor general who oversaw the ICAC in Hong Kong answered to the democratically elected British Prime Minister. Hong Kong offers an example of a strong executive, accountable to a democratically elected leader, with wide discretion to pursue a mandate. Using a combination of new rules and education the governor general dramatically reduced corruption and changed public attitudes toward its practice.

So much for the intractable culture of corruption – Transparency International now ranks Hong Kong among the least corrupt places in the world, ahead of countries like the United Kingdom, Japan, and the United States.

Further reading:
Manion, Melanie. Corruption by Design. Cambridge: Harvard University Press, 2004.

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