Abstract
It is not uncommon for academics and practitioners to adopt either a legal or an economic approach to studying corruption. Indeed, these two approaches are often seen as alternative and at times hard to reconcile. And yet, the benefits of combining these two approaches to obtain a more comprehensive vision of the phenomenon are quite obvious. This is precisely what the late Marco Arnone and Leonardo Borlini do in their recent work Corruption—Economic Analysis and International Law. The authors’ starting point is that to understand corruption, one has to focus on the relation between markets (the economic aspect) and rules (the legal aspect) and how these interact with each other to create incentives and disincentives for corruption. This methodological approach may very well be the main original contribution of the book and is particularly useful to understand the contemporary evolution of corruption both as a concept and in the practice.
The 2008 financial crisis has clearly highlighted the shortcomings of the global governance system to control and prevent certain illicit practices. Some of these shortcomings are partly related to the relatively narrow way in which we understand corruption, and in turn, this has also encouraged many to reconsider and possibly expand the definition of corruption, from the narrow, traditional one, largely corresponding with the concept of bribery, to a much broader one, including new types of illicit behaviors related in different ways to financial markets, for example, private-to-private corruption, money laundering, and London Interbank Offered Rate (LIBOR) rigging. This discussion is far from settled, as demonstrated by the ongoing lively debated on tax avoidance and related practices. The approach adopted by Arnone and Borlini provides the tools to better understand corruption in this broader, emerging context. Although legal analysis has sometime come short, for example, in capturing broad macrolevel developments in the corruption and anticorruption field, economic analysis can help fill gaps. As the authors note, only once the economic costs and growing transnational dimension of corruption are understood, and it is possible to assess the achievements and shortcomings of the current international anticorruption framework. The book goes back and forth between the economic and the legal, by providing case studies, original elaboration of data, and an extensive overview of the literature. The result is a refreshing and insightful manual.
From a practitioner’s point of view, the most useful conclusion from the book is that while the international legal framework has made remarkable strides forward, for example, through the growing prohibition and enforcement of antiforeign bribery laws and the emerging international framework for asset recovery, significant gaps remain in the way financial markets work (a typical example is the lack of transparency of beneficial ownership information), which result in major distortions to markets and allow for different forms of corruption to thrive.