Corruption in Taiwan: The Data and its Doubts

Written by Ian Inkster.

Image credit: TI_comp-20 by Transparency International/Flickr, license CC BY-NC-ND 2.0

Corruption has been a dirty word for many years. Whilst it was a normal mechanism of courtly governance in most nations at some much earlier times, the move to modernity has everywhere removed any legitimation it might have had in the past. Usually, this is seen as in contradistinction to the growth of electorates, civil societies, and democratic constitutions, however partial or ill-applied the latter often are. Nevertheless, we must also revisit the numerous exceptions and the general irregularity of this historical trend even at the heart of the claim. Recall the rise of the American ‘robber barons,’ the corrupted monopoly structures of production and financing that accompanied the evolution of the US to economic power in the later nineteenth century, and the gangsterism that emerged out of prohibition and protectionism. Think of Tsarist Russia, rife with corruption through the nineteenth century as Russian Occidentalists fought the traditional, so-called ‘Oriental’ mores with Enlightenment values from further west, perhaps most notably post-Napoleonic France. Slavophiles versus Marxists it turned out to be. Still, even under nominally more progressive values, the 1917 revolution by no means removed bureaucratic graft, transgression and profiteering amongst Soviet bureaucrats and the many organisations of Russian 5-year planning. The reversion of post-Soviet Russia to massive black marketeering, and the rise of powerful mafia-style interests permeating the political system, illustrates how linearity is easily traduced. This has given rise to standard interpretations of Russia as inevitably corrupt because of underlying cultural structures. This sort of interpretation has also fallen across China time and time again but in a different way. What seems to have been an encompassing underbelly of Confucianism, the social goal of which was to act fairly amongst equals and with benevolence amongst inferiors and due deference to superiors — one shared by many of the citizens of contemporary Taiwan — certainly gave rise to corrupt practices throughout Imperial China. It also promoted serious inefficiency and violence in Maoist China, and in a much milder manner does not, seemingly, forbid charges of corrupt governance and capitalist institutions in today’s Taiwan.

Again, this can be variably nuanced. Clearly, the fast economic growth that occurred in the Newly Industrial Economies of East Asia from the 1950s and 1960s, seen as a planned outcome of the ‘developmental state’ in those few nations (wherein direct industrial policy and government contract was associated with oscillating phases of trade protectionism and relative trade freedom), provided numerous niches for the nurturing of modernised forms of corruption associated with dealings between the state and fast-rising private enterprise. Although most NICS are now more democratic than they have ever been before, the shadow of some style of ‘Asianism’ combined with an avid ‘developmentalism’ is thought to render such nations only partially democratic, in some ways not genuinely modern. Of course, such observation is hardly mindful and is contradicted throughout the globe. Nevertheless, it is there. Even the unique and still marvellous actions of the Sunflower Movement, perhaps Taiwan’s most famous moment of free challenge to a democratic government in favour of increased democratic governance, do not disturb this sort of casual flippancy regarding Asian democracy, and in this charges concerning a resilience of corruption have become a leading element. Thus, it is now commonly argued that such states have dealt better with  Covid 19 than the older major democracies (outstandingly UK, USA, France, Italy and Belgium). This is because of authoritarian public direction to obey emergency regulations combined with corruption in disguising ‘real’ numbers of Covid casualties and mortality. We shall return to this last point claiming corrupt reportage later.

Taiwan scores very high in the Corruption Perception Index (CPI) issued by Transparency International and regarded as a reliable global indicator (Row A, world ranking in parenthesis). However, issues such as close links between business and politics, insufficient legal frameworks and anti-corruption legislation, the public’s high tolerance for corrupt practices, and lack of education to increase the understanding of bribery, still need to be addressed. Generally, democracies are not amongst the most corrupt nations: the ten most corrupt nations from this source are Libya, North Korea, Afghanistan, Equatorial Guinea, Sudan, Venezuela, Yemen, Syria, Somalia, and South Sudan. Table 1 below provides data that permits some comparative analysis.

TABLE 1: 12 Nations ranked by Corruption (CPI, Row A) scores, 2019.

The ten nations spanning either side of Taiwan in table 1 are those of over 10 million population that are immediately above (better) or below (worse) in the corruption stakes (Row A with world ranking in parenthesis). As the globally least corrupt nation in the world with an 87 score, Denmark is added at rank 1 to give a rough comparator. Taiwan at 65 is ranked 31 and lies in the middle between a relatively non-corrupt UK and a much more corrupt Poland. East Asia is also represented by South Korea (59), but we might add that China is rated at 41, Japan at 73, Hong Kong at 76 and ranked 19, and Singapore at 85 and ranked high at 7. So globally, and as a nation within East Asia, Taiwan seems to have a case to answer. The next 5 columns give the broadest statistical comparison of Taiwan and its ten surrounding states.

The most startling finding is that Taiwan is a much richer nation than the other nations of relative high corruption as measured here. Column B, PPPUS$, measures the purchasing power parity of nations in per capita US dollars. Nations such as Poland or Portugal or even Israel are of far lower per capita income. The average income of the 5 nations with higher CPIs is $43,184, the incomes of the more corrupt group average at $34,975, whilst Denmark, the least corrupt nation of all, has an income level almost identical to that of Taiwan at $50,643. Generalising, Taiwan is a nation where the level of per capita income does not reflect the common characteristic of large ‘high corruption’ economies -it is a comparatively rich corrupt nation on these measures.

Columns C-F may give context to the social and analytical value of such corruption measures. For instance, the Human Development Index of Row C, a UN measure of human or societal development, designed to give some indication of welfare and the viability of institutions, shows Taiwan lying below all of the less corrupt nations but also below three of the more corrupt nations. Contrariwise, Taiwan scores very highly on the Heritage Foundation’s Economic Freedom Index. It ranks 11^th in the world, (row D), well above the poorer and more corrupt nations of table 1, and above nations such as the USA, Japan and France. This suggests that higher corruption levels do not dampen fast growth and high incomes based on free-market institutions (D). Taiwan may not have developed enough in terms of social institutions given its income, but rides high on free markets, as do Singapore and Hong Kong. This is also shown in column F, which measures strength of market institutions in a Global Competitiveness Index which estimates ‘the set of institutions, policies and factors that determine the level of productivity’. High income, highly corrupt Taiwan, is characterised by high reliance on freedom of economic behaviour within civil society. Finally, measuring political freedom is even more fraught with danger than measures of economic freedom. However, column E gives the Freedom House Index (Washington) for 2019 designed to measure freedom across the world. Again, Taiwan’s political freedom is similar to that found in less corrupt nations such as the UK or France, indeed above that of the USA.

Our exemplary nation, Denmark, shows remarkable consistency in having low levels of corruption but high levels of economic and political freedoms, as well as high income and welfare expenditure. In comparison, Taiwan illustrates some deviation from this – it is a nation of higher corruption and high income that has over time achieved good levels of economic and political freedoms. It seems to contradict any simple linearity, and in particular the generalisation that corruption inhibits growth and welfare compared to cleaner governance overall.

Columns G and H act as a final nuance to any analysis between fair dealing, democracy, and economic success. Column G measures Covid 19 incidence per million people, and column H estimates the percentage of Covid deaths to total cases in the months since the inception of the pandemic. Taiwan is clearly in an unparalleled position, where even Denmark’s advantages of social institutions and good governance have yielded much higher incidence and mortality rates. Nations, both rich and relatively incorrupt, such as France and the UK, have appalling records in comparison. Of the nations of greater corruption, only South Korea can begin to match the low Taiwan figures for the Covid invasion.

Can we say anything at all coherent about the links between corruption, social and economic outcomes, and governance? If we trust these general comparative estimates from established research institutions, then to say the least the picture is never clear. Writers such as Francis Fukuyama, have suggested that failed or failing states may be analysed in terms of strength and scope of government institutions and policies. A government may have great strength in implementation of policy, but a scope so narrow that much of social well-being is neglected.  Another might have a tremendous scope of activity but a weakness in implementation. Such extremes might lead to state failure, especially given exogenous shocks such as Covid 19. As it happens, Taiwan, which can now boast over 200 days without any new Covid infection, is seen by Fukuyama as a state embedded in a ‘mandarin bureaucratic tradition,’ which avoided ‘predatory rent-seeking.’ This helped to create both economic growth and increased welfare. Certainly, it long maintained a better distribution of income than most established democratic states, and we might hazard that this was done through institutional reforms that widened the scope and strengthened implementation of policies. The Covid experience could be seen as exemplary of this approach, for South Korea and Japan were also late-developers and have battled Covid well, as seen in table 1. Corruption levels do not seem to come into it, the Japanese colonial institutions of the years 1895-1945 may matter more. Nevertheless, the Fukuyama approach does not resolve the question of corruption and efficiency. What exactly determines that bureaucrats monitoring fast economic growth will become or remain competent and non-corrupt enough to guide entire industrial sectors? May elements of corruption also be seen as remnants of Confucian gift reciprocity, a vehicle for both growth and greater prosperity? Ironically perhaps, in 2004 Fukuyama cited the CPI of table I column A as a possible general indicator of state function and quality of policy. So, the beat goes on.

Professor Ian Inkster is a global historian and political economist at SOAS, University of London, and a Senior Fellow at the Taiwan Studies Programme and China Policy Institute at the University of Nottingham who has taught and researched at universities in Britain, Australia, Taiwan and Japan. Author of 13 books on global dynamics and history, with particular focus on industrial and technological development, and the editor of History of Technologysince 2000.Forthcoming books are Distraction Capitalism: The World Since 1971, and Invasive Technology and Indigenous Frontiers. Case Studies of Accelerated Change in History with David Pretel. He tweets @inksterian

This article is part of a special issue on corruption in Taiwan.