The Cost of Corruption in Higher Education

Corruption was symptomatic of business and government interactions in Russia and other countries of the former Soviet Union before and during the economic transition of the 1990s. Corruption is difficult to quantify, but the perception of corruption is quantifiable. Nations can even be arranged along a hierarchy by the degree to which they are perceived as being corrupt, for instance, in their business practices or in the administration of public responsibilities. Based on the Transparency International Corruption Per- ceptions Index for 2005, a world map (see online appendix fig. A1) shows how pervasive corruption remains in the public sector.1 According to this index, countries in the former USSR region, including Central Asia and the Caucasus, were among the most corrupt countries in the world in 2005.2 With the breakup of the USSR and decentralization, ministries and local governments operated more independently than under the planned econ- omy. The central government's enforcement mechanisms weakened, and rent-seeking (using administrative position for personal gain) activity was not as effectively monitored as under central planning. The result, at least in the earliest years of independence, was an increase in overall corruption and inefficiency at many levels of government and administration, and the ed- ucation sector was not immune from these forces (Shleifer and Vishny 1993; Shleifer and Treisman 2005). Ministry of Education officials began to demand bribes for accreditation and procurement.3 Administrators demanded bribes for admission, housing, book rental, grades, exams, and transcripts. Teachers demanded bribes for admission, grades and exams, and book purchases. Anecdotal evidence suggests that the level of education corruption in the USSR was lower than in other sectors. The "fairness" of the system, particularly to children of proletarian origins and minorities, was manifest as a philosophy. During the economic transition, the central authority in education broke