More market, less corruption

By Ulla T¿rn¾s

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Economic growth is the key to poverty reduction and there is no faster way to achieve it than through a market economy. A market economy has several advantages that make it attractive for the poor in developing countries; it provides competition and freedom of choice as well as a short-cut to less corruption.

A good example is the privatisation of mobile telephony. In Bangladesh privatisation has made it possible for many to escape the bureaucracy that makes getting a telephone connection an unequal and futile battle; that is unless you are prepared to bribe the state telephone monopoly when things move quickly.

Investors do not fear competition, they fear corruption. In those countries that have had a bitter experience with the transition to a market economy the transition has almost always been characterised by a complete lack of transparency, free competition and equal opportunities.

Free markets are only about restricting the role of the state. Private monopolies can be just as harmful as public monopolies. And the state must be able to intervene if companies attempt to circumvent or distort market forces. The cartel cases in Denmark in recent years clearly demonstrate that the free market cannot always be left completely unregulated.

Denmark supports business sector development in programme countries across a broad front, including pro-business regulations, better functioning courts and labour markets, things we take for granted in Denmark but which are all essential for the market to operate effectively. Denmark has recently developed a new, free network portal -- www.business-anti-corruption.comwww.business-anti-corruption.com-- providing small and medium-sized businesses with practical tools to reduce the risk of corruption when doing business. Our prosperity is built upon one of the most open and flexible market economies in the world. It has been the way forward for us. And it is also the way forward for the poor in developing countries.

This week's Soapbox speaker is the Danish minister for development cooperation.