KINIBIZ At a recent forum, I addressed a major paradox: why has serious corruption not hindered Malaysia’s economic development despite its devastating impact on the economies of Myanmar and the Philippines as well as countries in Africa and Latin America? To offer insights into this paradox, two concepts can be employed: developmental and degenerative corruption.

Degenerative vs developmental corruption

Degenerative corruption occurs when the economic resources distributed between politicians and businesspeople are not used in a productive manner. It involves little more than theft or embezzlement of public resources or funds, much of it channelled out of the country.

Developmental corruption, on the other hand, has a transactive dimension. This form of corruption results in the creation of a market for property rights over which politicians have allocative power. In this context, private businesses are willing to pay money to influence the allocation of government-generated concessions such as licences, contracts and privatised projects.

In Malaysia, corruption has operated in ways where resources have been channelled to selected businesspeople who had, in a number of cases, used them productively. What sets Malaysia’s leaders apart from the Philippines’ Marcos, Zaire’s Mobutu and Nicaragua’s Somoza is not the level of corruption, but how it functions.

In those cases, degenerative corruption was the norm, involving kleptocracy, a situation when the ruling class took advantage of corruption to extend personal wealth. Such corruption involved the plunder of the treasury, channelling of funds to foreign countries and the transfer of public resources to businesses that were either owned by the ruling elite or in which they had a considerable stake.

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TERENCE GOMEZ is based at Universiti Malaya. He is the author of ‘Politics in Business: Umno’s Corporate Investments’ and ‘Malaysia’s Political Economy: Politics, Patronage and Profits’.