State capture is a worldwide occurrence meant to benefit a few elite, says academic
International economist and analyst Daniel Kaufmann details how some countries experience state capture in the oil‚ mining and financial sectors
The state-capture phenomenon manifests itself in different countries and has a devastating impact on affected countries. It is also shaped in a way that is meant to benefit a few elite.
Testifying at the Zondo commission of inquiry on Wednesday‚ international economist and analyst Daniel Kaufmann detailed how some countries experience state capture in the oil‚ mining and financial sectors, while in some it is drug traffickers involved in illicit trade that have substantial influence on governments.
Despite differing in its manifestation‚ the consequences of state capture are all devastating for economies‚ said the Chilean academic. Kaufmann said it didn’t matter what form the capture takes‚ at its heart it is designed to “shape the rules of the games for the benefit of the few elite”.
Among the arms of the state that are targets for capture are‚ among others‚ the president‚ cabinet‚ judiciary and councilors. But Kaufmann said the relationships between the “captor” and the “captured” are complex and developed over time. “It is not just a relationship between two parties. It is a complex web.”
State capture could‚ he said, lead to erosion of the economy; cost to the entire society; plunge a country into recession; negatively affect poor members of society; destroy competition; affect countries’ borrowing capacity; and lead to unemployment and an increase in state-grant dependency.
Kaufmann said countries in transition are at a higher risk of state capture. However‚ even in well-developed countries‚ there may still be corruption or some form of influence exerted by elite individuals on the state.
He said research that looked at state capture after the fall of the Soviet Union shows that countries which accomplish a lot are those that have vibrant political contestability.
“The extent to which there is vibrant competition politically [is crucial]. Associated with this is civil liberties — the voice of civil society‚ the engagement of civil society … The other is economic contestability and competition, to what extent a vibrant medium- or small-business sector is allowed to operate‚ even if there are large enterprises.”
He added that what happens in each political party also has an impact on the environment in which state capture can occur. “The extent not only of political contestability among parties but the extent to which there is democracy within each party … the whole notion of how political parties function being made public" all play a part.