Corrosive Capital

Promoting accountability, transparency, and market orientation for resilient economies that benefit everyone.

Corrosive Capital Initiative

By addressing the global challenge of corrosive capital through programs tailored to various contexts, CIPE empowers local stakeholders to advance democratic and market-oriented principles and institutions. Our wealth of knowledge allows for significant cross-fertilization of ideas and contributes to growing global awareness and understanding of corrosive capital.

What is the Problem?

A high influx of any capital leads to an increased risk of corruption. This is especially the case with corrosive capital, which originates in authoritarian regimes. It is capital, either state or private, that lacks transparency, accountability, and market orientation. Corrosive capital exploits and exacerbates governance gaps to influence economic and political developments in recipient countries.

What is the Solution?

To make countries more resilient to the effects of corrosive capital, CIPE’s civil society partners map corrosive capital’s impact on critical economic sectors of their countries. With input from other affected stakeholders, partners propose necessary regulatory and institutional reforms.

Global Impact

In the Western Balkans, the relevant public institutions show interest in addressing the threat of corrosive capital

Solutions proposed by CIPE partners in the Balkans draw on the input of stakeholders both from the public and private sectors. The public engages with the information distributed by CIPE and its partners.

Tax evasion is one of the ways to move around corrosive capital. Montenegro‘s tax system and reliance on foreign capital and tourism make it vulnerable to geopolitical tensions. A CIPE partner collaborates with the Tax Administration to strengthen its resilience and improve tax collection.

In North Macedonia, CIPE’s partner assists the Directorate for Technological Industrial Development Zones to ensure that investment incentives benefit the country’s economic development generally rather than individual companies.

Public procurement accounts for a substantial part of state budgets. Therefore, CIPE’s partner in Bosnia and Herzegovina and the Public Procurement Agency seek to identify ways to carry out procurement effectively and free from external influence.

In a broad effort encompassing nine Asian countries, CIPE is creating local task forces to monitor public procurement

Public procurement is a leading avenue by which corrosive capital enters Asian markets. To empower the in-country expert task forces to scrutinize public works projects that became the problem, CIPE is building partner capacity to analyze them.

Through a series of case studies documenting how corrosive capital co-opts public works projects, CIPE partners raise public awareness of the issue, including the cost to taxpayers.

Because corrosive capital is poorly understood, CIPE is setting up a network of experts to produce case studies of its effects across Asia and to conduct associated outreach

In Argentina, CIPE and its partner researched past governance gaps related to foreign investment in infrastructure.

CIPE and its partner concluded that investments resulting from international bilateral agreements between Argentina and other states were exempt from the nation’s standard legal procurement framework. In many cases, the government directly awarded projects to foreign companies.

A lack of transparency, accountability, and proper oversight led to costs 21% higher than they would have been if competitive procurement procedures were followed.

CIPE and its partner seek to foster public oversight to promote accountability in the Argentine government.