CERGE-EI, Prague, 11 November 1998

conference & workshop organized by



(an excerpt from the report by TI-CZ, pages 9 to 10 – presentation of Vladimir Rott see Annex G, pages 22 to 27, available as PDF, see downloads here below)


Countries' Competitiveness vs. Corruption

 (page 25)

Mr. Rott presented a correlation between countries competitiveness and corruption. Corruption is one of the main, out of the many, factors suffocating emerging economies. Its negative impact on competitiveness clearly shows when comparing a ranking of countries according to their competitiveness to that according to their corruption perceptivity. Four groups of countries may be described:

  • highly competitive clean countries (including Switzerland)
  • medium to low competitive less clean and rather corrupt countries
  • uncompetitive rather corrupt and corrupt countries (including Czech Republic)
  • uncompetitive corrupt countries.


Hidden Costs – Hidden Possible Benefits

  (page 26)

Everyone doing business in a corrupt country may easily assess the costs of corruption, often allowing for such provisions in company's consolidated accounting data. Almost every Swiss company encountered corruption – and bowed to it in the Czech Republic – in the Swiss "pragmatic" business way.

But a new Swiss awareness is emerging – that businesses should try to apply cleaner principles and that it well may pay, after some efforts.

As long as the corruption costs remain hidden in company internal data, the benefits cannot be demonstrated to anyone – the public, politicians, economists, academics. The statisticians efforts to measure "hidden" or "shadow" economy, cannot lead alone to any progress. Businesses – meaning first of all those with both economic power and knowledge of clean ways how to do business – must act. A "coming-out" is necessary, and possible. Yet most Swiss businesses still grossly underestimate their power and impact they may, and should, have on Czech politics – such as actively pursuing, promoting, pressing and pushing for the recovery and implementation of sound social values and of functioning legal and political systems.

"Corruption tax" is being collected with a high effectivity, the Czech tax authorities may only dream of. An assessment – rather low – of this "tax" in the Czech national accounts and data clearly shows the potential of impressive lowering of taxes in a more open, transparent and cleaner economy than in that which many think to have to preserve today. Moreover, this "corruption tax" flows into hiding, off-shore. A vast investment lost, badly needed for the recovery of Czech economy.

Who pays the "corruption tax"? Everybody does: the small, the big, the rich, the poor, now. And for some time in the future.


What May Be Done?

  (page 27)

Everybody knows these days. But taking part in your own things – at last – still must be learned.

The information society must lead to an acting society in the Czech Republic as well. Knowledge is one thing, acting according to it the next – both skills are still underdeveloped in the Czech Republic.

The feeling of suffocated chances for the few skilled leads to cash drain, brain drain, people drain. Perhaps a chance – it seems to be the only one in sight – for the Czech society and economy is that they will be "forced" into more developed world. But is (economic) power identical with integrity?

The conflicts of opening are being avoided, and so is the way from a close to an open society, with their benefits and some pains. Classical Popper! And classical is his description – over half a century old – why we do so little. Why we may choose to, prefer to do so little.



presentation by Vladimir Rott
(PDF, 170kb –
excerpt from the report, pages 22 to 27)

complete report
(PDF, 640kb – 31 pages, presentations and speaches)

(report by TI-CZ of June 1999)


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