Current global governance has not proved to be a receipt to achieve sustainable growth. In truth, despite the global governance discourse, the instability of global macroeconomic dynamics has been reinforced by the expansion of global finance.
In the last weeks, the failure of current global governance has also been related to corruption. Indeed, the Panama Papers exposed a global network of corruption and added more concerns to the scepticism about the compliance with good governance principles.
Looking back, in the context of the crisis of the Keynesian pattern of international regulation, increasing political pressures enhanced trade and financial deregulation and the neoliberal critique to the postwar pattern of development stimulated the relevance of the market forces to promote economic growth. After the 1990s, the global governance agenda focused economic policy rules and, in the context of economic integration, global investors turn out to “punish” the lack of credibility in those national governments that do not follow the disciplinary rules. Besides, deep structural changes involved increasing capital mobility, the global expansion of banks and institutional investors. As a result, the dynamics of economic growth and job creation has been increasingly subordinated to asset management strategies in a context of high capital mobility.
Current global governance certainly affects day-to-day life of citizens. For example, mainly after the global crisis, austerity programs have subordinated the whole policy decision process that turns out to look for a realignment of relative prices (mainly real wages) and further structural reforms (mainly in the public sector and the labour market). Longer working hours, job destruction, turnover, outsourcing, workforce displacement, job reduction and loss of rights are part of the spectrum of management practices that emerge from the austerity guidelines. This scenario, characterized by precarious jobs, enhances the vulnerability of workers, mainly young people.
Corruption has become not only a threat to global good governance but also a social problem which cannot be neglected. Within this scenario, corruption – that is to say, the abuse of the use of public institutions and resources for private gain – turned out to be a global problem because its practices frequently involve international players and transactions. Accordingly the OECD, corruption occurs at those points where the political, bureaucratic and economic interests coincide.
Since the late 1980s, many studies have shown conclusively that corruption is detrimental to both the economic and the political well-being of countries since the widespread of corruption creates distortions, inefficiencies and increases inequality. Indeed, a broad range of practices imposes deep societal costs that prevent economic growth and weaken political institutions by undermining trust.
Considering the links between globalization, economic growth, inequality and corruption, it is, therefore, appropriate to include the complex converging economic, political and social issues of the “economics of corruption” in the economics curriculum. Economics education will certainly involve students while learning and thinking critically about these challenges.