Corruption and Countervailing Action in Pakistan

Abstract

In this chapter I present some preliminary results on the nature of corruption and countervailing action in Pakistan, drawing on data extracted from newspapers. Once it is recognized that corruption creates losers as well as winners, some dramatic implications for the theory of corruption emerge. This leads to an analysis of the countervailing action taken by losers to offset their losses from corruption. Countervailing action may take several forms. Direct action is perhaps the most effective, as it operates by reducing the net gain from corruption. An examination of the instruments of direct action (including various forms of protest, legal action, political action, and propagating reports on corruption) shows that it often generates press reports on corruption, especially where the press is relatively free; both the losers and other agents will put pressure on the newspapers to provide coverage of both the corruption and direct action. Because pressure emanates from many different sources, it is expected that the coverage of corruption and the direct action will be comprehensive. The analysis of data extracted from three newspapers in Pakistan, covering the period January–February 1994, supports this thesis. Before presenting any empirical results however we analyse the concept of countervailing action, and examine the relative merits of the different sources of data on corruption and countervailing action.

The research for this chapter was initiated when I was visiting at the Applied Economics Research Centre, University of Karachi, during 1994–5. I am grateful to Sikander Mehmood, project economist, for his help.