The Challenge to Corruption and the International Business Environment

Two factors have turned the attention of the governments of the developed world to the problems of corruption, the end of the cold war and the trends to globalisation. The end of the cold war has resulted in a far more critical attitude emerging amongst aid donors to the use of funds by recipient governments in the developing world, to issues of good governance, the rule of law and efficient public administration. Meanwhile, the globalisation of production and the challenges of the regulation of the movements of capital have resulted in attempts to regulate the international financial environment. For businesses, these demands will have a profound impact upon the way that they operate in the global economy. Whilst the pressure upon developing country governments to reform is driven, in part, by a desire to improve the investment environment for the private sector, it will also place legal constraints upon the behaviour of companies in these countries. Similarly attempts at international regulation to prevent tax avoidance and evasion and to prevent money laundering, will create additional obligations upon multinational companies and international financial institutions. This article will review the rationale for these developments and outline the various strands that are creating a new international environment for the new century.