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Corruption, Transparency and Governance Workshop on Deliberative Democracy Dani Kaufmann and Francesca Recanatini WBI Global Governance Team May 14, 2003 www.worldbank.org/wbi/governance

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Page 1: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Corruption Transparency and Governance Workshop on Deliberative Democracy

Dani Kaufmann and Francesca RecanatiniWBI Global Governance TeamMay 14 2003wwwworldbankorgwbigovernance

Objective

To discuss cross-country and in-country methodologies developed by the World Bank Institute to assess governance and transparencyTo introduce the private-public governance lsquonexusrsquo (capture) and present some preliminary evidence

Main ResultsGovernance is linked to developmentParticipatory collective action and lsquovoicersquoare key for sustainable policy changesTransparency incentives and prevention play a role in improving governanceThe role of politics ndash especially influencecapture has been under-estimated

OutlineDefinition of lsquogovernancersquoGovernance development and democracyWorld Bank methodologies developed to measure and improve governance

Cross-countryIn-country

Mechanisms of influence and capture

What What isis GovernanceGovernanceA working definition for public governanceA working definition for public governance

Governance is the process institutions and customs through which the function of governing is carried out

GovernanceGovernancehelliphellip

(1) the process by which governments are selected held accountable monitored and replaced

(2) the capacity of governments to manage resources efficiently and to formulate implement and enforce sound policies and regulations and

(3) the respect for the institutions that govern economic and social interactions

Each of the 3 main components of governance can be unbundled into 2 subcomponentsVoice and AccountabilityPolitical Stability and lack of ViolenceQuality Regulatory FrameworkGovernment EffectivenessControl of CorruptionRule of Law

Building Aggregate Governance IndicatorsUse Unobserved Components Model (UCM) to construct composite governance indicators and margins of error for each country

Estimate of governance weighted average of observed scores for each country re-scaled to common units

Weights are proportional to precision of underlying data sources

Precision depends on how strongly individual sources are correlated with each other

Margins of error reflect (a) number of sources in which a country appears and (b) the precision of those sources

Inputs for Governance Indicators 2002Publisher Publication Source Country Coverage

bullWefarsquos DRIMcGraw-Hill Country Risk Review Poll 117 developed and developing

bullBusiness Env Risk Intelligence BERI Survey 50115 developed and developing

bullColumbia University Columbia U State Failure Poll 84 developed and developing

bullWorld Bank Country Policy amp Institution Assmnt Poll 136 developing

bullGallup International Voice of the People Survey 47 developed and developing

bullBusiness Env Risk Intelligence BERI Survey 50115 developed and developing

bullEBRD Transition Report Poll 27 transition economies

bullEconomist Intelligence Unit Country Indicators Poll 115 developed and developing

bullFreedom House Freedom in the World Poll 192 developed and developing

bullFreedom House Nations in Transit Poll 27 transition economies

bullWorld Economic ForumCID Global Competitiveness Survey 80 developed and developing

bullHeritage Foundation Economic Freedom Index Poll 156 developed and developing

bullLatino-barometro LBO Survey 17 developing

bullPolitical Risk Services International Country Risk Guide Poll 140 developed and developing

bullReporters Without Borders Reporters sans frontieres (RSF) Survey 138 developed and developing

bullWorld BankEBRD BEEPS Survey 27 transition economies

bullIMD Lausanne World Competitiveness Yearbook Survey 49 developed and developing

bullBinghamton Univ Human Rights Violations Research Survey 140 developed and developing

Control of Corruption one Aggregate Indicator (selected countries for illustration based on 200001 research data)

-25

0

25

Cong

o D

em R

ep (

Zaire

)

KENY

A

ZIM

BABW

E

INDO

NESI

A

TANZ

ANIA

KORE

A N

ORT

H

HAIT

I

MO

LDO

VA

ARM

ENIA

VIET

NAM

IVO

RY C

OAS

T

BANG

LADE

SH

ALBA

NIA

INDI

A

CHIN

A

MEX

ICO

BULG

ARIA

CRO

ATIA

MO

ZAM

BIQ

UE

MAL

AYSI

A

URUG

UAY

TUNI

SIA

COST

A RI

CA

BOTS

WAN

A

CYPR

US

NAM

IBIA

CHIL

E

NEW

ZEA

LAND

Source KKZ 200001

POOR GOOD

CorruptionLevel

Margin of Error

Good Corruption Control

Rule of Law 1998 vs 2000 ndash Latin America

Source for data httpwwwworldbankorgwbigovernancegovdata2001htm Chart downloaded from httpinfoworldbankorggovernancekkzNote the thin lines depict 90 confidence intervals Colors are assigned according to the following criteria Red 25 or less rank worse Orange between 25 and 50 Yellow between 50 and 75 Light Green between 75 and 90 Dark Green above 90

lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000

Source for data httpwwwworldbankorgwbigovernancegovdata2001htm Map downloaded from httpinfoworldbankorggovernancekkzgov2001mapasp Colors are assigned according to the following criteria Red 25 or less rank worse Orange between 25 and 50 Yellow between 50 and 75 Light Green between75 and 90 Dark Green above 90

Governance and Poverty Nexus IGovernance and Poverty Nexus I

Lower Investment and Growth

Unsound economicinstitutional policies due to vested interests

Distorted allocation of public expendituresinvestments

Low human capital accumulation

Elite corporate interests capture laws and distort policymaking

Absence of rule of law and property rights

Governance obstacles to private sector development

Lack of Health and Education

bull Low human capital accumulation

bull Lower quality of education and health care

Conthellip

Governance and Poverty contGovernance and Poverty cont

Poor have Smaller share in Growth

State capture by elite of government policies and resource allocationRegressiveness of bribery ldquotaxrdquo on small firms and the poorRegressiveness in public expenditures and investmentsUnequal income distribution

Bribery imposes regressive tax and impairs access and quality of basic services for health education and justicePolitical capture by elites of access to particular services

Impaired Access to Public Services

The lsquoDividendrsquo of Good GovernanceInfant Mortality and Corruption

0

10

20

30

40

50

60

70

80

90

Weak Average Good

Control of Corruption x Development Dividend

0

2000

4000

6000

8000

10000

12000

Weak Average Good

Regulatory Burdenx Development Dividend

Per Capita Income and Regulatory Burden

Literacy and Rule of Law

0

25

50

75

100

Weak Average Good

Rule of Law x Development Dividend

Per Capita Income andVoice and Accountability

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Weak Average Strong

Voice and Accountabilityx DevelopmentDividend

Note The bars depict the simple correlation between good governance and development outcomes The line depicts thepredicted value when taking into account the causality effects (ldquoDevelopment Dividendrdquo) from improved governance to betterdevelopment outcomes For data and methodological details visit httpwwwworldbankorgwbigovernance

Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000

Good Governance

-10

00

10

20

O ECD East Asia NIC Eastern Europe Middle East NAfrica

Latin America East Asiaemerging

Sub-SaharanAfrica

Former SovietUnion

South Asia

Rule of Law

Control of Corruption

Voice and Accountability

Poor Governance

Source Governance Research Indicators (KKZ) based from data in D Kaufmann and A Kraay Growth without Governance for 175 countries details at httpwwwworldbankorgwbigovernancepubsgrowthgovhtm Units in vertical axis are expressed in terms of standard deviations around zero Country and regional average estimates are subject to margins of error (illustrated by thin line atop each column) implying caution in interpretation of the estimates and that no precise country rating is warranted See also regional clarifications in note 6

Figure 5 Transparency and GDP Growth

1

3

5

Low Middle High

Extent of Transparency

Transparent Information by GovernmentEffective Parliamentary OversightCorporate Ethics

Annual GDP Growth ()

Source Annual GDP growth over 1999-2001 is taken from WDI 2002 GDP is computed in PPP terms The various transparency governance variables drawn from Executive Opinion Survey 2002

Cor

rupt

ion

Cor

rupt

ion

High

Low

Corruption is associated with absence of Civil Liberties

Not Free Partly Free Free

Based on averages of data from 160 countries Civil Liberties

Control of Graft and Freedom of the Press

AGOALB

AREARG

ARM

AUSAUT

AZE

BEN

BFABGDBGR

BHR

BHS

BIHBLR

BOL

BRABRN

BWA

CANCHE

CHL

CHNCIV

CMR

COGCOL

CRICUB

CYP

CZE

DEU

DNK

DOMDZA ECU

EGY

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHA

GIN

GMBGNB

GRC

GTM

GUY

HKG

HND

HRVHTI

HUN

IDN

IND

IRL

IRN

IRG

ISL

ISR

ITA

JAMJOR

JPN

KAZKENKGZ

KOR

KWT

LBN

LBRLBY

LKALSO

LTU

LUX

LVA

MAR

MDA MDGMEX

MKD MLI

MLT

MMR

MNG

MOZ

MUS

MWI

MYSNAM

NER

NGA NIC

NLDNOR

NZL

OMN

PAKPAN

PER PHL

PNG

POL

PRK

PRT

PRY

QAT

ROMRUSSAU

SDN

SEN

SGP

SLESLV

SOM

SURSVK

SVN

SWE

SWZ

SYRTCD

TGO THA

TJK TKM

TTO

TUN

TUR

TWN

TZA

UGA

UKR

URY

USA

UZBVEN

VNM

YEMYUG

ZAF

ZAR

ZMBZWE

r = 068-25

-2-15

-1-05

005

115

225

0 02 04 06 08 1

High

Low

Low High

r = 68

Freedom of the Press (Freedom House)

Con

trol o

f Gra

ft [k

kz]

Overall Evidence is Sobering howeverProgress on Governance is modest at best so far

Evidence points to slow if any average progress worldwide on key dimensions of governance

This contrasts with some other development dimensions (eg quality of infrastructure quality of mathscience education effective absorption of new technologies) where progress is apparent

At the same time substantial variation cross-country even within a region Some successes

0

15

3

1984-1988 1989-1993 1994-1998 1999-2001

TRANSITION

EMERGING

OECD+NIC

Source lsquoRethinking Governancersquo based on calculations from WDI Y-axis measures the log value of the average inflation for each region across each period

Significant Decline in Inflation Rates WorldwideHighInflation

Low

(avg inlogs)

15

4

65

1997 1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

EasternEurope

East AsiaDeveloping

Latin America

Former SovietUnion

South Asia

Quality of Infrastructure(Regional Averages of HighLow Quality every year GCR 1997-2002)

Low

High

1

2

3

4

5

6

1984-1988 1989-1993 1994-1998 1999 2000 2001

Emerging amp Transition Economies

Source ICRGPRS 1984-2001 data subject to margins of error

Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG

Poor

Good

2

425

65

1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

East AsiaDeveloping

Eastern Europe

Latin America

Former SovietUnion

Extent of Independence of the Judiciary (Regional Averages of ExtentLack of Independence every year)

Non-Independent

Independent

From From lsquolsquoresearchresearchrsquorsquo to policy into policy in--country focuscountry focusA demand-driven process to improve governance build local capacity and consensus among key stakeholdersKey elements participation transparency and analytical rigor (diagnostic surveys)Outcomes greater local capacity new policy actors baseline governance data and action plan for policy reform

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 2: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Objective

To discuss cross-country and in-country methodologies developed by the World Bank Institute to assess governance and transparencyTo introduce the private-public governance lsquonexusrsquo (capture) and present some preliminary evidence

Main ResultsGovernance is linked to developmentParticipatory collective action and lsquovoicersquoare key for sustainable policy changesTransparency incentives and prevention play a role in improving governanceThe role of politics ndash especially influencecapture has been under-estimated

OutlineDefinition of lsquogovernancersquoGovernance development and democracyWorld Bank methodologies developed to measure and improve governance

Cross-countryIn-country

Mechanisms of influence and capture

What What isis GovernanceGovernanceA working definition for public governanceA working definition for public governance

Governance is the process institutions and customs through which the function of governing is carried out

GovernanceGovernancehelliphellip

(1) the process by which governments are selected held accountable monitored and replaced

(2) the capacity of governments to manage resources efficiently and to formulate implement and enforce sound policies and regulations and

(3) the respect for the institutions that govern economic and social interactions

Each of the 3 main components of governance can be unbundled into 2 subcomponentsVoice and AccountabilityPolitical Stability and lack of ViolenceQuality Regulatory FrameworkGovernment EffectivenessControl of CorruptionRule of Law

Building Aggregate Governance IndicatorsUse Unobserved Components Model (UCM) to construct composite governance indicators and margins of error for each country

Estimate of governance weighted average of observed scores for each country re-scaled to common units

Weights are proportional to precision of underlying data sources

Precision depends on how strongly individual sources are correlated with each other

Margins of error reflect (a) number of sources in which a country appears and (b) the precision of those sources

Inputs for Governance Indicators 2002Publisher Publication Source Country Coverage

bullWefarsquos DRIMcGraw-Hill Country Risk Review Poll 117 developed and developing

bullBusiness Env Risk Intelligence BERI Survey 50115 developed and developing

bullColumbia University Columbia U State Failure Poll 84 developed and developing

bullWorld Bank Country Policy amp Institution Assmnt Poll 136 developing

bullGallup International Voice of the People Survey 47 developed and developing

bullBusiness Env Risk Intelligence BERI Survey 50115 developed and developing

bullEBRD Transition Report Poll 27 transition economies

bullEconomist Intelligence Unit Country Indicators Poll 115 developed and developing

bullFreedom House Freedom in the World Poll 192 developed and developing

bullFreedom House Nations in Transit Poll 27 transition economies

bullWorld Economic ForumCID Global Competitiveness Survey 80 developed and developing

bullHeritage Foundation Economic Freedom Index Poll 156 developed and developing

bullLatino-barometro LBO Survey 17 developing

bullPolitical Risk Services International Country Risk Guide Poll 140 developed and developing

bullReporters Without Borders Reporters sans frontieres (RSF) Survey 138 developed and developing

bullWorld BankEBRD BEEPS Survey 27 transition economies

bullIMD Lausanne World Competitiveness Yearbook Survey 49 developed and developing

bullBinghamton Univ Human Rights Violations Research Survey 140 developed and developing

Control of Corruption one Aggregate Indicator (selected countries for illustration based on 200001 research data)

-25

0

25

Cong

o D

em R

ep (

Zaire

)

KENY

A

ZIM

BABW

E

INDO

NESI

A

TANZ

ANIA

KORE

A N

ORT

H

HAIT

I

MO

LDO

VA

ARM

ENIA

VIET

NAM

IVO

RY C

OAS

T

BANG

LADE

SH

ALBA

NIA

INDI

A

CHIN

A

MEX

ICO

BULG

ARIA

CRO

ATIA

MO

ZAM

BIQ

UE

MAL

AYSI

A

URUG

UAY

TUNI

SIA

COST

A RI

CA

BOTS

WAN

A

CYPR

US

NAM

IBIA

CHIL

E

NEW

ZEA

LAND

Source KKZ 200001

POOR GOOD

CorruptionLevel

Margin of Error

Good Corruption Control

Rule of Law 1998 vs 2000 ndash Latin America

Source for data httpwwwworldbankorgwbigovernancegovdata2001htm Chart downloaded from httpinfoworldbankorggovernancekkzNote the thin lines depict 90 confidence intervals Colors are assigned according to the following criteria Red 25 or less rank worse Orange between 25 and 50 Yellow between 50 and 75 Light Green between 75 and 90 Dark Green above 90

lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000

Source for data httpwwwworldbankorgwbigovernancegovdata2001htm Map downloaded from httpinfoworldbankorggovernancekkzgov2001mapasp Colors are assigned according to the following criteria Red 25 or less rank worse Orange between 25 and 50 Yellow between 50 and 75 Light Green between75 and 90 Dark Green above 90

Governance and Poverty Nexus IGovernance and Poverty Nexus I

Lower Investment and Growth

Unsound economicinstitutional policies due to vested interests

Distorted allocation of public expendituresinvestments

Low human capital accumulation

Elite corporate interests capture laws and distort policymaking

Absence of rule of law and property rights

Governance obstacles to private sector development

Lack of Health and Education

bull Low human capital accumulation

bull Lower quality of education and health care

Conthellip

Governance and Poverty contGovernance and Poverty cont

Poor have Smaller share in Growth

State capture by elite of government policies and resource allocationRegressiveness of bribery ldquotaxrdquo on small firms and the poorRegressiveness in public expenditures and investmentsUnequal income distribution

Bribery imposes regressive tax and impairs access and quality of basic services for health education and justicePolitical capture by elites of access to particular services

Impaired Access to Public Services

The lsquoDividendrsquo of Good GovernanceInfant Mortality and Corruption

0

10

20

30

40

50

60

70

80

90

Weak Average Good

Control of Corruption x Development Dividend

0

2000

4000

6000

8000

10000

12000

Weak Average Good

Regulatory Burdenx Development Dividend

Per Capita Income and Regulatory Burden

Literacy and Rule of Law

0

25

50

75

100

Weak Average Good

Rule of Law x Development Dividend

Per Capita Income andVoice and Accountability

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Weak Average Strong

Voice and Accountabilityx DevelopmentDividend

Note The bars depict the simple correlation between good governance and development outcomes The line depicts thepredicted value when taking into account the causality effects (ldquoDevelopment Dividendrdquo) from improved governance to betterdevelopment outcomes For data and methodological details visit httpwwwworldbankorgwbigovernance

Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000

Good Governance

-10

00

10

20

O ECD East Asia NIC Eastern Europe Middle East NAfrica

Latin America East Asiaemerging

Sub-SaharanAfrica

Former SovietUnion

South Asia

Rule of Law

Control of Corruption

Voice and Accountability

Poor Governance

Source Governance Research Indicators (KKZ) based from data in D Kaufmann and A Kraay Growth without Governance for 175 countries details at httpwwwworldbankorgwbigovernancepubsgrowthgovhtm Units in vertical axis are expressed in terms of standard deviations around zero Country and regional average estimates are subject to margins of error (illustrated by thin line atop each column) implying caution in interpretation of the estimates and that no precise country rating is warranted See also regional clarifications in note 6

Figure 5 Transparency and GDP Growth

1

3

5

Low Middle High

Extent of Transparency

Transparent Information by GovernmentEffective Parliamentary OversightCorporate Ethics

Annual GDP Growth ()

Source Annual GDP growth over 1999-2001 is taken from WDI 2002 GDP is computed in PPP terms The various transparency governance variables drawn from Executive Opinion Survey 2002

Cor

rupt

ion

Cor

rupt

ion

High

Low

Corruption is associated with absence of Civil Liberties

Not Free Partly Free Free

Based on averages of data from 160 countries Civil Liberties

Control of Graft and Freedom of the Press

AGOALB

AREARG

ARM

AUSAUT

AZE

BEN

BFABGDBGR

BHR

BHS

BIHBLR

BOL

BRABRN

BWA

CANCHE

CHL

CHNCIV

CMR

COGCOL

CRICUB

CYP

CZE

DEU

DNK

DOMDZA ECU

EGY

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHA

GIN

GMBGNB

GRC

GTM

GUY

HKG

HND

HRVHTI

HUN

IDN

IND

IRL

IRN

IRG

ISL

ISR

ITA

JAMJOR

JPN

KAZKENKGZ

KOR

KWT

LBN

LBRLBY

LKALSO

LTU

LUX

LVA

MAR

MDA MDGMEX

MKD MLI

MLT

MMR

MNG

MOZ

MUS

MWI

MYSNAM

NER

NGA NIC

NLDNOR

NZL

OMN

PAKPAN

PER PHL

PNG

POL

PRK

PRT

PRY

QAT

ROMRUSSAU

SDN

SEN

SGP

SLESLV

SOM

SURSVK

SVN

SWE

SWZ

SYRTCD

TGO THA

TJK TKM

TTO

TUN

TUR

TWN

TZA

UGA

UKR

URY

USA

UZBVEN

VNM

YEMYUG

ZAF

ZAR

ZMBZWE

r = 068-25

-2-15

-1-05

005

115

225

0 02 04 06 08 1

High

Low

Low High

r = 68

Freedom of the Press (Freedom House)

Con

trol o

f Gra

ft [k

kz]

Overall Evidence is Sobering howeverProgress on Governance is modest at best so far

Evidence points to slow if any average progress worldwide on key dimensions of governance

This contrasts with some other development dimensions (eg quality of infrastructure quality of mathscience education effective absorption of new technologies) where progress is apparent

At the same time substantial variation cross-country even within a region Some successes

0

15

3

1984-1988 1989-1993 1994-1998 1999-2001

TRANSITION

EMERGING

OECD+NIC

Source lsquoRethinking Governancersquo based on calculations from WDI Y-axis measures the log value of the average inflation for each region across each period

Significant Decline in Inflation Rates WorldwideHighInflation

Low

(avg inlogs)

15

4

65

1997 1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

EasternEurope

East AsiaDeveloping

Latin America

Former SovietUnion

South Asia

Quality of Infrastructure(Regional Averages of HighLow Quality every year GCR 1997-2002)

Low

High

1

2

3

4

5

6

1984-1988 1989-1993 1994-1998 1999 2000 2001

Emerging amp Transition Economies

Source ICRGPRS 1984-2001 data subject to margins of error

Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG

Poor

Good

2

425

65

1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

East AsiaDeveloping

Eastern Europe

Latin America

Former SovietUnion

Extent of Independence of the Judiciary (Regional Averages of ExtentLack of Independence every year)

Non-Independent

Independent

From From lsquolsquoresearchresearchrsquorsquo to policy into policy in--country focuscountry focusA demand-driven process to improve governance build local capacity and consensus among key stakeholdersKey elements participation transparency and analytical rigor (diagnostic surveys)Outcomes greater local capacity new policy actors baseline governance data and action plan for policy reform

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 3: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Main ResultsGovernance is linked to developmentParticipatory collective action and lsquovoicersquoare key for sustainable policy changesTransparency incentives and prevention play a role in improving governanceThe role of politics ndash especially influencecapture has been under-estimated

OutlineDefinition of lsquogovernancersquoGovernance development and democracyWorld Bank methodologies developed to measure and improve governance

Cross-countryIn-country

Mechanisms of influence and capture

What What isis GovernanceGovernanceA working definition for public governanceA working definition for public governance

Governance is the process institutions and customs through which the function of governing is carried out

GovernanceGovernancehelliphellip

(1) the process by which governments are selected held accountable monitored and replaced

(2) the capacity of governments to manage resources efficiently and to formulate implement and enforce sound policies and regulations and

(3) the respect for the institutions that govern economic and social interactions

Each of the 3 main components of governance can be unbundled into 2 subcomponentsVoice and AccountabilityPolitical Stability and lack of ViolenceQuality Regulatory FrameworkGovernment EffectivenessControl of CorruptionRule of Law

Building Aggregate Governance IndicatorsUse Unobserved Components Model (UCM) to construct composite governance indicators and margins of error for each country

Estimate of governance weighted average of observed scores for each country re-scaled to common units

Weights are proportional to precision of underlying data sources

Precision depends on how strongly individual sources are correlated with each other

Margins of error reflect (a) number of sources in which a country appears and (b) the precision of those sources

Inputs for Governance Indicators 2002Publisher Publication Source Country Coverage

bullWefarsquos DRIMcGraw-Hill Country Risk Review Poll 117 developed and developing

bullBusiness Env Risk Intelligence BERI Survey 50115 developed and developing

bullColumbia University Columbia U State Failure Poll 84 developed and developing

bullWorld Bank Country Policy amp Institution Assmnt Poll 136 developing

bullGallup International Voice of the People Survey 47 developed and developing

bullBusiness Env Risk Intelligence BERI Survey 50115 developed and developing

bullEBRD Transition Report Poll 27 transition economies

bullEconomist Intelligence Unit Country Indicators Poll 115 developed and developing

bullFreedom House Freedom in the World Poll 192 developed and developing

bullFreedom House Nations in Transit Poll 27 transition economies

bullWorld Economic ForumCID Global Competitiveness Survey 80 developed and developing

bullHeritage Foundation Economic Freedom Index Poll 156 developed and developing

bullLatino-barometro LBO Survey 17 developing

bullPolitical Risk Services International Country Risk Guide Poll 140 developed and developing

bullReporters Without Borders Reporters sans frontieres (RSF) Survey 138 developed and developing

bullWorld BankEBRD BEEPS Survey 27 transition economies

bullIMD Lausanne World Competitiveness Yearbook Survey 49 developed and developing

bullBinghamton Univ Human Rights Violations Research Survey 140 developed and developing

Control of Corruption one Aggregate Indicator (selected countries for illustration based on 200001 research data)

-25

0

25

Cong

o D

em R

ep (

Zaire

)

KENY

A

ZIM

BABW

E

INDO

NESI

A

TANZ

ANIA

KORE

A N

ORT

H

HAIT

I

MO

LDO

VA

ARM

ENIA

VIET

NAM

IVO

RY C

OAS

T

BANG

LADE

SH

ALBA

NIA

INDI

A

CHIN

A

MEX

ICO

BULG

ARIA

CRO

ATIA

MO

ZAM

BIQ

UE

MAL

AYSI

A

URUG

UAY

TUNI

SIA

COST

A RI

CA

BOTS

WAN

A

CYPR

US

NAM

IBIA

CHIL

E

NEW

ZEA

LAND

Source KKZ 200001

POOR GOOD

CorruptionLevel

Margin of Error

Good Corruption Control

Rule of Law 1998 vs 2000 ndash Latin America

Source for data httpwwwworldbankorgwbigovernancegovdata2001htm Chart downloaded from httpinfoworldbankorggovernancekkzNote the thin lines depict 90 confidence intervals Colors are assigned according to the following criteria Red 25 or less rank worse Orange between 25 and 50 Yellow between 50 and 75 Light Green between 75 and 90 Dark Green above 90

lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000

Source for data httpwwwworldbankorgwbigovernancegovdata2001htm Map downloaded from httpinfoworldbankorggovernancekkzgov2001mapasp Colors are assigned according to the following criteria Red 25 or less rank worse Orange between 25 and 50 Yellow between 50 and 75 Light Green between75 and 90 Dark Green above 90

Governance and Poverty Nexus IGovernance and Poverty Nexus I

Lower Investment and Growth

Unsound economicinstitutional policies due to vested interests

Distorted allocation of public expendituresinvestments

Low human capital accumulation

Elite corporate interests capture laws and distort policymaking

Absence of rule of law and property rights

Governance obstacles to private sector development

Lack of Health and Education

bull Low human capital accumulation

bull Lower quality of education and health care

Conthellip

Governance and Poverty contGovernance and Poverty cont

Poor have Smaller share in Growth

State capture by elite of government policies and resource allocationRegressiveness of bribery ldquotaxrdquo on small firms and the poorRegressiveness in public expenditures and investmentsUnequal income distribution

Bribery imposes regressive tax and impairs access and quality of basic services for health education and justicePolitical capture by elites of access to particular services

Impaired Access to Public Services

The lsquoDividendrsquo of Good GovernanceInfant Mortality and Corruption

0

10

20

30

40

50

60

70

80

90

Weak Average Good

Control of Corruption x Development Dividend

0

2000

4000

6000

8000

10000

12000

Weak Average Good

Regulatory Burdenx Development Dividend

Per Capita Income and Regulatory Burden

Literacy and Rule of Law

0

25

50

75

100

Weak Average Good

Rule of Law x Development Dividend

Per Capita Income andVoice and Accountability

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Weak Average Strong

Voice and Accountabilityx DevelopmentDividend

Note The bars depict the simple correlation between good governance and development outcomes The line depicts thepredicted value when taking into account the causality effects (ldquoDevelopment Dividendrdquo) from improved governance to betterdevelopment outcomes For data and methodological details visit httpwwwworldbankorgwbigovernance

Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000

Good Governance

-10

00

10

20

O ECD East Asia NIC Eastern Europe Middle East NAfrica

Latin America East Asiaemerging

Sub-SaharanAfrica

Former SovietUnion

South Asia

Rule of Law

Control of Corruption

Voice and Accountability

Poor Governance

Source Governance Research Indicators (KKZ) based from data in D Kaufmann and A Kraay Growth without Governance for 175 countries details at httpwwwworldbankorgwbigovernancepubsgrowthgovhtm Units in vertical axis are expressed in terms of standard deviations around zero Country and regional average estimates are subject to margins of error (illustrated by thin line atop each column) implying caution in interpretation of the estimates and that no precise country rating is warranted See also regional clarifications in note 6

Figure 5 Transparency and GDP Growth

1

3

5

Low Middle High

Extent of Transparency

Transparent Information by GovernmentEffective Parliamentary OversightCorporate Ethics

Annual GDP Growth ()

Source Annual GDP growth over 1999-2001 is taken from WDI 2002 GDP is computed in PPP terms The various transparency governance variables drawn from Executive Opinion Survey 2002

Cor

rupt

ion

Cor

rupt

ion

High

Low

Corruption is associated with absence of Civil Liberties

Not Free Partly Free Free

Based on averages of data from 160 countries Civil Liberties

Control of Graft and Freedom of the Press

AGOALB

AREARG

ARM

AUSAUT

AZE

BEN

BFABGDBGR

BHR

BHS

BIHBLR

BOL

BRABRN

BWA

CANCHE

CHL

CHNCIV

CMR

COGCOL

CRICUB

CYP

CZE

DEU

DNK

DOMDZA ECU

EGY

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHA

GIN

GMBGNB

GRC

GTM

GUY

HKG

HND

HRVHTI

HUN

IDN

IND

IRL

IRN

IRG

ISL

ISR

ITA

JAMJOR

JPN

KAZKENKGZ

KOR

KWT

LBN

LBRLBY

LKALSO

LTU

LUX

LVA

MAR

MDA MDGMEX

MKD MLI

MLT

MMR

MNG

MOZ

MUS

MWI

MYSNAM

NER

NGA NIC

NLDNOR

NZL

OMN

PAKPAN

PER PHL

PNG

POL

PRK

PRT

PRY

QAT

ROMRUSSAU

SDN

SEN

SGP

SLESLV

SOM

SURSVK

SVN

SWE

SWZ

SYRTCD

TGO THA

TJK TKM

TTO

TUN

TUR

TWN

TZA

UGA

UKR

URY

USA

UZBVEN

VNM

YEMYUG

ZAF

ZAR

ZMBZWE

r = 068-25

-2-15

-1-05

005

115

225

0 02 04 06 08 1

High

Low

Low High

r = 68

Freedom of the Press (Freedom House)

Con

trol o

f Gra

ft [k

kz]

Overall Evidence is Sobering howeverProgress on Governance is modest at best so far

Evidence points to slow if any average progress worldwide on key dimensions of governance

This contrasts with some other development dimensions (eg quality of infrastructure quality of mathscience education effective absorption of new technologies) where progress is apparent

At the same time substantial variation cross-country even within a region Some successes

0

15

3

1984-1988 1989-1993 1994-1998 1999-2001

TRANSITION

EMERGING

OECD+NIC

Source lsquoRethinking Governancersquo based on calculations from WDI Y-axis measures the log value of the average inflation for each region across each period

Significant Decline in Inflation Rates WorldwideHighInflation

Low

(avg inlogs)

15

4

65

1997 1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

EasternEurope

East AsiaDeveloping

Latin America

Former SovietUnion

South Asia

Quality of Infrastructure(Regional Averages of HighLow Quality every year GCR 1997-2002)

Low

High

1

2

3

4

5

6

1984-1988 1989-1993 1994-1998 1999 2000 2001

Emerging amp Transition Economies

Source ICRGPRS 1984-2001 data subject to margins of error

Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG

Poor

Good

2

425

65

1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

East AsiaDeveloping

Eastern Europe

Latin America

Former SovietUnion

Extent of Independence of the Judiciary (Regional Averages of ExtentLack of Independence every year)

Non-Independent

Independent

From From lsquolsquoresearchresearchrsquorsquo to policy into policy in--country focuscountry focusA demand-driven process to improve governance build local capacity and consensus among key stakeholdersKey elements participation transparency and analytical rigor (diagnostic surveys)Outcomes greater local capacity new policy actors baseline governance data and action plan for policy reform

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 4: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

OutlineDefinition of lsquogovernancersquoGovernance development and democracyWorld Bank methodologies developed to measure and improve governance

Cross-countryIn-country

Mechanisms of influence and capture

What What isis GovernanceGovernanceA working definition for public governanceA working definition for public governance

Governance is the process institutions and customs through which the function of governing is carried out

GovernanceGovernancehelliphellip

(1) the process by which governments are selected held accountable monitored and replaced

(2) the capacity of governments to manage resources efficiently and to formulate implement and enforce sound policies and regulations and

(3) the respect for the institutions that govern economic and social interactions

Each of the 3 main components of governance can be unbundled into 2 subcomponentsVoice and AccountabilityPolitical Stability and lack of ViolenceQuality Regulatory FrameworkGovernment EffectivenessControl of CorruptionRule of Law

Building Aggregate Governance IndicatorsUse Unobserved Components Model (UCM) to construct composite governance indicators and margins of error for each country

Estimate of governance weighted average of observed scores for each country re-scaled to common units

Weights are proportional to precision of underlying data sources

Precision depends on how strongly individual sources are correlated with each other

Margins of error reflect (a) number of sources in which a country appears and (b) the precision of those sources

Inputs for Governance Indicators 2002Publisher Publication Source Country Coverage

bullWefarsquos DRIMcGraw-Hill Country Risk Review Poll 117 developed and developing

bullBusiness Env Risk Intelligence BERI Survey 50115 developed and developing

bullColumbia University Columbia U State Failure Poll 84 developed and developing

bullWorld Bank Country Policy amp Institution Assmnt Poll 136 developing

bullGallup International Voice of the People Survey 47 developed and developing

bullBusiness Env Risk Intelligence BERI Survey 50115 developed and developing

bullEBRD Transition Report Poll 27 transition economies

bullEconomist Intelligence Unit Country Indicators Poll 115 developed and developing

bullFreedom House Freedom in the World Poll 192 developed and developing

bullFreedom House Nations in Transit Poll 27 transition economies

bullWorld Economic ForumCID Global Competitiveness Survey 80 developed and developing

bullHeritage Foundation Economic Freedom Index Poll 156 developed and developing

bullLatino-barometro LBO Survey 17 developing

bullPolitical Risk Services International Country Risk Guide Poll 140 developed and developing

bullReporters Without Borders Reporters sans frontieres (RSF) Survey 138 developed and developing

bullWorld BankEBRD BEEPS Survey 27 transition economies

bullIMD Lausanne World Competitiveness Yearbook Survey 49 developed and developing

bullBinghamton Univ Human Rights Violations Research Survey 140 developed and developing

Control of Corruption one Aggregate Indicator (selected countries for illustration based on 200001 research data)

-25

0

25

Cong

o D

em R

ep (

Zaire

)

KENY

A

ZIM

BABW

E

INDO

NESI

A

TANZ

ANIA

KORE

A N

ORT

H

HAIT

I

MO

LDO

VA

ARM

ENIA

VIET

NAM

IVO

RY C

OAS

T

BANG

LADE

SH

ALBA

NIA

INDI

A

CHIN

A

MEX

ICO

BULG

ARIA

CRO

ATIA

MO

ZAM

BIQ

UE

MAL

AYSI

A

URUG

UAY

TUNI

SIA

COST

A RI

CA

BOTS

WAN

A

CYPR

US

NAM

IBIA

CHIL

E

NEW

ZEA

LAND

Source KKZ 200001

POOR GOOD

CorruptionLevel

Margin of Error

Good Corruption Control

Rule of Law 1998 vs 2000 ndash Latin America

Source for data httpwwwworldbankorgwbigovernancegovdata2001htm Chart downloaded from httpinfoworldbankorggovernancekkzNote the thin lines depict 90 confidence intervals Colors are assigned according to the following criteria Red 25 or less rank worse Orange between 25 and 50 Yellow between 50 and 75 Light Green between 75 and 90 Dark Green above 90

lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000

Source for data httpwwwworldbankorgwbigovernancegovdata2001htm Map downloaded from httpinfoworldbankorggovernancekkzgov2001mapasp Colors are assigned according to the following criteria Red 25 or less rank worse Orange between 25 and 50 Yellow between 50 and 75 Light Green between75 and 90 Dark Green above 90

Governance and Poverty Nexus IGovernance and Poverty Nexus I

Lower Investment and Growth

Unsound economicinstitutional policies due to vested interests

Distorted allocation of public expendituresinvestments

Low human capital accumulation

Elite corporate interests capture laws and distort policymaking

Absence of rule of law and property rights

Governance obstacles to private sector development

Lack of Health and Education

bull Low human capital accumulation

bull Lower quality of education and health care

Conthellip

Governance and Poverty contGovernance and Poverty cont

Poor have Smaller share in Growth

State capture by elite of government policies and resource allocationRegressiveness of bribery ldquotaxrdquo on small firms and the poorRegressiveness in public expenditures and investmentsUnequal income distribution

Bribery imposes regressive tax and impairs access and quality of basic services for health education and justicePolitical capture by elites of access to particular services

Impaired Access to Public Services

The lsquoDividendrsquo of Good GovernanceInfant Mortality and Corruption

0

10

20

30

40

50

60

70

80

90

Weak Average Good

Control of Corruption x Development Dividend

0

2000

4000

6000

8000

10000

12000

Weak Average Good

Regulatory Burdenx Development Dividend

Per Capita Income and Regulatory Burden

Literacy and Rule of Law

0

25

50

75

100

Weak Average Good

Rule of Law x Development Dividend

Per Capita Income andVoice and Accountability

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Weak Average Strong

Voice and Accountabilityx DevelopmentDividend

Note The bars depict the simple correlation between good governance and development outcomes The line depicts thepredicted value when taking into account the causality effects (ldquoDevelopment Dividendrdquo) from improved governance to betterdevelopment outcomes For data and methodological details visit httpwwwworldbankorgwbigovernance

Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000

Good Governance

-10

00

10

20

O ECD East Asia NIC Eastern Europe Middle East NAfrica

Latin America East Asiaemerging

Sub-SaharanAfrica

Former SovietUnion

South Asia

Rule of Law

Control of Corruption

Voice and Accountability

Poor Governance

Source Governance Research Indicators (KKZ) based from data in D Kaufmann and A Kraay Growth without Governance for 175 countries details at httpwwwworldbankorgwbigovernancepubsgrowthgovhtm Units in vertical axis are expressed in terms of standard deviations around zero Country and regional average estimates are subject to margins of error (illustrated by thin line atop each column) implying caution in interpretation of the estimates and that no precise country rating is warranted See also regional clarifications in note 6

Figure 5 Transparency and GDP Growth

1

3

5

Low Middle High

Extent of Transparency

Transparent Information by GovernmentEffective Parliamentary OversightCorporate Ethics

Annual GDP Growth ()

Source Annual GDP growth over 1999-2001 is taken from WDI 2002 GDP is computed in PPP terms The various transparency governance variables drawn from Executive Opinion Survey 2002

Cor

rupt

ion

Cor

rupt

ion

High

Low

Corruption is associated with absence of Civil Liberties

Not Free Partly Free Free

Based on averages of data from 160 countries Civil Liberties

Control of Graft and Freedom of the Press

AGOALB

AREARG

ARM

AUSAUT

AZE

BEN

BFABGDBGR

BHR

BHS

BIHBLR

BOL

BRABRN

BWA

CANCHE

CHL

CHNCIV

CMR

COGCOL

CRICUB

CYP

CZE

DEU

DNK

DOMDZA ECU

EGY

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHA

GIN

GMBGNB

GRC

GTM

GUY

HKG

HND

HRVHTI

HUN

IDN

IND

IRL

IRN

IRG

ISL

ISR

ITA

JAMJOR

JPN

KAZKENKGZ

KOR

KWT

LBN

LBRLBY

LKALSO

LTU

LUX

LVA

MAR

MDA MDGMEX

MKD MLI

MLT

MMR

MNG

MOZ

MUS

MWI

MYSNAM

NER

NGA NIC

NLDNOR

NZL

OMN

PAKPAN

PER PHL

PNG

POL

PRK

PRT

PRY

QAT

ROMRUSSAU

SDN

SEN

SGP

SLESLV

SOM

SURSVK

SVN

SWE

SWZ

SYRTCD

TGO THA

TJK TKM

TTO

TUN

TUR

TWN

TZA

UGA

UKR

URY

USA

UZBVEN

VNM

YEMYUG

ZAF

ZAR

ZMBZWE

r = 068-25

-2-15

-1-05

005

115

225

0 02 04 06 08 1

High

Low

Low High

r = 68

Freedom of the Press (Freedom House)

Con

trol o

f Gra

ft [k

kz]

Overall Evidence is Sobering howeverProgress on Governance is modest at best so far

Evidence points to slow if any average progress worldwide on key dimensions of governance

This contrasts with some other development dimensions (eg quality of infrastructure quality of mathscience education effective absorption of new technologies) where progress is apparent

At the same time substantial variation cross-country even within a region Some successes

0

15

3

1984-1988 1989-1993 1994-1998 1999-2001

TRANSITION

EMERGING

OECD+NIC

Source lsquoRethinking Governancersquo based on calculations from WDI Y-axis measures the log value of the average inflation for each region across each period

Significant Decline in Inflation Rates WorldwideHighInflation

Low

(avg inlogs)

15

4

65

1997 1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

EasternEurope

East AsiaDeveloping

Latin America

Former SovietUnion

South Asia

Quality of Infrastructure(Regional Averages of HighLow Quality every year GCR 1997-2002)

Low

High

1

2

3

4

5

6

1984-1988 1989-1993 1994-1998 1999 2000 2001

Emerging amp Transition Economies

Source ICRGPRS 1984-2001 data subject to margins of error

Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG

Poor

Good

2

425

65

1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

East AsiaDeveloping

Eastern Europe

Latin America

Former SovietUnion

Extent of Independence of the Judiciary (Regional Averages of ExtentLack of Independence every year)

Non-Independent

Independent

From From lsquolsquoresearchresearchrsquorsquo to policy into policy in--country focuscountry focusA demand-driven process to improve governance build local capacity and consensus among key stakeholdersKey elements participation transparency and analytical rigor (diagnostic surveys)Outcomes greater local capacity new policy actors baseline governance data and action plan for policy reform

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 5: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

What What isis GovernanceGovernanceA working definition for public governanceA working definition for public governance

Governance is the process institutions and customs through which the function of governing is carried out

GovernanceGovernancehelliphellip

(1) the process by which governments are selected held accountable monitored and replaced

(2) the capacity of governments to manage resources efficiently and to formulate implement and enforce sound policies and regulations and

(3) the respect for the institutions that govern economic and social interactions

Each of the 3 main components of governance can be unbundled into 2 subcomponentsVoice and AccountabilityPolitical Stability and lack of ViolenceQuality Regulatory FrameworkGovernment EffectivenessControl of CorruptionRule of Law

Building Aggregate Governance IndicatorsUse Unobserved Components Model (UCM) to construct composite governance indicators and margins of error for each country

Estimate of governance weighted average of observed scores for each country re-scaled to common units

Weights are proportional to precision of underlying data sources

Precision depends on how strongly individual sources are correlated with each other

Margins of error reflect (a) number of sources in which a country appears and (b) the precision of those sources

Inputs for Governance Indicators 2002Publisher Publication Source Country Coverage

bullWefarsquos DRIMcGraw-Hill Country Risk Review Poll 117 developed and developing

bullBusiness Env Risk Intelligence BERI Survey 50115 developed and developing

bullColumbia University Columbia U State Failure Poll 84 developed and developing

bullWorld Bank Country Policy amp Institution Assmnt Poll 136 developing

bullGallup International Voice of the People Survey 47 developed and developing

bullBusiness Env Risk Intelligence BERI Survey 50115 developed and developing

bullEBRD Transition Report Poll 27 transition economies

bullEconomist Intelligence Unit Country Indicators Poll 115 developed and developing

bullFreedom House Freedom in the World Poll 192 developed and developing

bullFreedom House Nations in Transit Poll 27 transition economies

bullWorld Economic ForumCID Global Competitiveness Survey 80 developed and developing

bullHeritage Foundation Economic Freedom Index Poll 156 developed and developing

bullLatino-barometro LBO Survey 17 developing

bullPolitical Risk Services International Country Risk Guide Poll 140 developed and developing

bullReporters Without Borders Reporters sans frontieres (RSF) Survey 138 developed and developing

bullWorld BankEBRD BEEPS Survey 27 transition economies

bullIMD Lausanne World Competitiveness Yearbook Survey 49 developed and developing

bullBinghamton Univ Human Rights Violations Research Survey 140 developed and developing

Control of Corruption one Aggregate Indicator (selected countries for illustration based on 200001 research data)

-25

0

25

Cong

o D

em R

ep (

Zaire

)

KENY

A

ZIM

BABW

E

INDO

NESI

A

TANZ

ANIA

KORE

A N

ORT

H

HAIT

I

MO

LDO

VA

ARM

ENIA

VIET

NAM

IVO

RY C

OAS

T

BANG

LADE

SH

ALBA

NIA

INDI

A

CHIN

A

MEX

ICO

BULG

ARIA

CRO

ATIA

MO

ZAM

BIQ

UE

MAL

AYSI

A

URUG

UAY

TUNI

SIA

COST

A RI

CA

BOTS

WAN

A

CYPR

US

NAM

IBIA

CHIL

E

NEW

ZEA

LAND

Source KKZ 200001

POOR GOOD

CorruptionLevel

Margin of Error

Good Corruption Control

Rule of Law 1998 vs 2000 ndash Latin America

Source for data httpwwwworldbankorgwbigovernancegovdata2001htm Chart downloaded from httpinfoworldbankorggovernancekkzNote the thin lines depict 90 confidence intervals Colors are assigned according to the following criteria Red 25 or less rank worse Orange between 25 and 50 Yellow between 50 and 75 Light Green between 75 and 90 Dark Green above 90

lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000

Source for data httpwwwworldbankorgwbigovernancegovdata2001htm Map downloaded from httpinfoworldbankorggovernancekkzgov2001mapasp Colors are assigned according to the following criteria Red 25 or less rank worse Orange between 25 and 50 Yellow between 50 and 75 Light Green between75 and 90 Dark Green above 90

Governance and Poverty Nexus IGovernance and Poverty Nexus I

Lower Investment and Growth

Unsound economicinstitutional policies due to vested interests

Distorted allocation of public expendituresinvestments

Low human capital accumulation

Elite corporate interests capture laws and distort policymaking

Absence of rule of law and property rights

Governance obstacles to private sector development

Lack of Health and Education

bull Low human capital accumulation

bull Lower quality of education and health care

Conthellip

Governance and Poverty contGovernance and Poverty cont

Poor have Smaller share in Growth

State capture by elite of government policies and resource allocationRegressiveness of bribery ldquotaxrdquo on small firms and the poorRegressiveness in public expenditures and investmentsUnequal income distribution

Bribery imposes regressive tax and impairs access and quality of basic services for health education and justicePolitical capture by elites of access to particular services

Impaired Access to Public Services

The lsquoDividendrsquo of Good GovernanceInfant Mortality and Corruption

0

10

20

30

40

50

60

70

80

90

Weak Average Good

Control of Corruption x Development Dividend

0

2000

4000

6000

8000

10000

12000

Weak Average Good

Regulatory Burdenx Development Dividend

Per Capita Income and Regulatory Burden

Literacy and Rule of Law

0

25

50

75

100

Weak Average Good

Rule of Law x Development Dividend

Per Capita Income andVoice and Accountability

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Weak Average Strong

Voice and Accountabilityx DevelopmentDividend

Note The bars depict the simple correlation between good governance and development outcomes The line depicts thepredicted value when taking into account the causality effects (ldquoDevelopment Dividendrdquo) from improved governance to betterdevelopment outcomes For data and methodological details visit httpwwwworldbankorgwbigovernance

Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000

Good Governance

-10

00

10

20

O ECD East Asia NIC Eastern Europe Middle East NAfrica

Latin America East Asiaemerging

Sub-SaharanAfrica

Former SovietUnion

South Asia

Rule of Law

Control of Corruption

Voice and Accountability

Poor Governance

Source Governance Research Indicators (KKZ) based from data in D Kaufmann and A Kraay Growth without Governance for 175 countries details at httpwwwworldbankorgwbigovernancepubsgrowthgovhtm Units in vertical axis are expressed in terms of standard deviations around zero Country and regional average estimates are subject to margins of error (illustrated by thin line atop each column) implying caution in interpretation of the estimates and that no precise country rating is warranted See also regional clarifications in note 6

Figure 5 Transparency and GDP Growth

1

3

5

Low Middle High

Extent of Transparency

Transparent Information by GovernmentEffective Parliamentary OversightCorporate Ethics

Annual GDP Growth ()

Source Annual GDP growth over 1999-2001 is taken from WDI 2002 GDP is computed in PPP terms The various transparency governance variables drawn from Executive Opinion Survey 2002

Cor

rupt

ion

Cor

rupt

ion

High

Low

Corruption is associated with absence of Civil Liberties

Not Free Partly Free Free

Based on averages of data from 160 countries Civil Liberties

Control of Graft and Freedom of the Press

AGOALB

AREARG

ARM

AUSAUT

AZE

BEN

BFABGDBGR

BHR

BHS

BIHBLR

BOL

BRABRN

BWA

CANCHE

CHL

CHNCIV

CMR

COGCOL

CRICUB

CYP

CZE

DEU

DNK

DOMDZA ECU

EGY

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHA

GIN

GMBGNB

GRC

GTM

GUY

HKG

HND

HRVHTI

HUN

IDN

IND

IRL

IRN

IRG

ISL

ISR

ITA

JAMJOR

JPN

KAZKENKGZ

KOR

KWT

LBN

LBRLBY

LKALSO

LTU

LUX

LVA

MAR

MDA MDGMEX

MKD MLI

MLT

MMR

MNG

MOZ

MUS

MWI

MYSNAM

NER

NGA NIC

NLDNOR

NZL

OMN

PAKPAN

PER PHL

PNG

POL

PRK

PRT

PRY

QAT

ROMRUSSAU

SDN

SEN

SGP

SLESLV

SOM

SURSVK

SVN

SWE

SWZ

SYRTCD

TGO THA

TJK TKM

TTO

TUN

TUR

TWN

TZA

UGA

UKR

URY

USA

UZBVEN

VNM

YEMYUG

ZAF

ZAR

ZMBZWE

r = 068-25

-2-15

-1-05

005

115

225

0 02 04 06 08 1

High

Low

Low High

r = 68

Freedom of the Press (Freedom House)

Con

trol o

f Gra

ft [k

kz]

Overall Evidence is Sobering howeverProgress on Governance is modest at best so far

Evidence points to slow if any average progress worldwide on key dimensions of governance

This contrasts with some other development dimensions (eg quality of infrastructure quality of mathscience education effective absorption of new technologies) where progress is apparent

At the same time substantial variation cross-country even within a region Some successes

0

15

3

1984-1988 1989-1993 1994-1998 1999-2001

TRANSITION

EMERGING

OECD+NIC

Source lsquoRethinking Governancersquo based on calculations from WDI Y-axis measures the log value of the average inflation for each region across each period

Significant Decline in Inflation Rates WorldwideHighInflation

Low

(avg inlogs)

15

4

65

1997 1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

EasternEurope

East AsiaDeveloping

Latin America

Former SovietUnion

South Asia

Quality of Infrastructure(Regional Averages of HighLow Quality every year GCR 1997-2002)

Low

High

1

2

3

4

5

6

1984-1988 1989-1993 1994-1998 1999 2000 2001

Emerging amp Transition Economies

Source ICRGPRS 1984-2001 data subject to margins of error

Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG

Poor

Good

2

425

65

1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

East AsiaDeveloping

Eastern Europe

Latin America

Former SovietUnion

Extent of Independence of the Judiciary (Regional Averages of ExtentLack of Independence every year)

Non-Independent

Independent

From From lsquolsquoresearchresearchrsquorsquo to policy into policy in--country focuscountry focusA demand-driven process to improve governance build local capacity and consensus among key stakeholdersKey elements participation transparency and analytical rigor (diagnostic surveys)Outcomes greater local capacity new policy actors baseline governance data and action plan for policy reform

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 6: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

GovernanceGovernancehelliphellip

(1) the process by which governments are selected held accountable monitored and replaced

(2) the capacity of governments to manage resources efficiently and to formulate implement and enforce sound policies and regulations and

(3) the respect for the institutions that govern economic and social interactions

Each of the 3 main components of governance can be unbundled into 2 subcomponentsVoice and AccountabilityPolitical Stability and lack of ViolenceQuality Regulatory FrameworkGovernment EffectivenessControl of CorruptionRule of Law

Building Aggregate Governance IndicatorsUse Unobserved Components Model (UCM) to construct composite governance indicators and margins of error for each country

Estimate of governance weighted average of observed scores for each country re-scaled to common units

Weights are proportional to precision of underlying data sources

Precision depends on how strongly individual sources are correlated with each other

Margins of error reflect (a) number of sources in which a country appears and (b) the precision of those sources

Inputs for Governance Indicators 2002Publisher Publication Source Country Coverage

bullWefarsquos DRIMcGraw-Hill Country Risk Review Poll 117 developed and developing

bullBusiness Env Risk Intelligence BERI Survey 50115 developed and developing

bullColumbia University Columbia U State Failure Poll 84 developed and developing

bullWorld Bank Country Policy amp Institution Assmnt Poll 136 developing

bullGallup International Voice of the People Survey 47 developed and developing

bullBusiness Env Risk Intelligence BERI Survey 50115 developed and developing

bullEBRD Transition Report Poll 27 transition economies

bullEconomist Intelligence Unit Country Indicators Poll 115 developed and developing

bullFreedom House Freedom in the World Poll 192 developed and developing

bullFreedom House Nations in Transit Poll 27 transition economies

bullWorld Economic ForumCID Global Competitiveness Survey 80 developed and developing

bullHeritage Foundation Economic Freedom Index Poll 156 developed and developing

bullLatino-barometro LBO Survey 17 developing

bullPolitical Risk Services International Country Risk Guide Poll 140 developed and developing

bullReporters Without Borders Reporters sans frontieres (RSF) Survey 138 developed and developing

bullWorld BankEBRD BEEPS Survey 27 transition economies

bullIMD Lausanne World Competitiveness Yearbook Survey 49 developed and developing

bullBinghamton Univ Human Rights Violations Research Survey 140 developed and developing

Control of Corruption one Aggregate Indicator (selected countries for illustration based on 200001 research data)

-25

0

25

Cong

o D

em R

ep (

Zaire

)

KENY

A

ZIM

BABW

E

INDO

NESI

A

TANZ

ANIA

KORE

A N

ORT

H

HAIT

I

MO

LDO

VA

ARM

ENIA

VIET

NAM

IVO

RY C

OAS

T

BANG

LADE

SH

ALBA

NIA

INDI

A

CHIN

A

MEX

ICO

BULG

ARIA

CRO

ATIA

MO

ZAM

BIQ

UE

MAL

AYSI

A

URUG

UAY

TUNI

SIA

COST

A RI

CA

BOTS

WAN

A

CYPR

US

NAM

IBIA

CHIL

E

NEW

ZEA

LAND

Source KKZ 200001

POOR GOOD

CorruptionLevel

Margin of Error

Good Corruption Control

Rule of Law 1998 vs 2000 ndash Latin America

Source for data httpwwwworldbankorgwbigovernancegovdata2001htm Chart downloaded from httpinfoworldbankorggovernancekkzNote the thin lines depict 90 confidence intervals Colors are assigned according to the following criteria Red 25 or less rank worse Orange between 25 and 50 Yellow between 50 and 75 Light Green between 75 and 90 Dark Green above 90

lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000

Source for data httpwwwworldbankorgwbigovernancegovdata2001htm Map downloaded from httpinfoworldbankorggovernancekkzgov2001mapasp Colors are assigned according to the following criteria Red 25 or less rank worse Orange between 25 and 50 Yellow between 50 and 75 Light Green between75 and 90 Dark Green above 90

Governance and Poverty Nexus IGovernance and Poverty Nexus I

Lower Investment and Growth

Unsound economicinstitutional policies due to vested interests

Distorted allocation of public expendituresinvestments

Low human capital accumulation

Elite corporate interests capture laws and distort policymaking

Absence of rule of law and property rights

Governance obstacles to private sector development

Lack of Health and Education

bull Low human capital accumulation

bull Lower quality of education and health care

Conthellip

Governance and Poverty contGovernance and Poverty cont

Poor have Smaller share in Growth

State capture by elite of government policies and resource allocationRegressiveness of bribery ldquotaxrdquo on small firms and the poorRegressiveness in public expenditures and investmentsUnequal income distribution

Bribery imposes regressive tax and impairs access and quality of basic services for health education and justicePolitical capture by elites of access to particular services

Impaired Access to Public Services

The lsquoDividendrsquo of Good GovernanceInfant Mortality and Corruption

0

10

20

30

40

50

60

70

80

90

Weak Average Good

Control of Corruption x Development Dividend

0

2000

4000

6000

8000

10000

12000

Weak Average Good

Regulatory Burdenx Development Dividend

Per Capita Income and Regulatory Burden

Literacy and Rule of Law

0

25

50

75

100

Weak Average Good

Rule of Law x Development Dividend

Per Capita Income andVoice and Accountability

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Weak Average Strong

Voice and Accountabilityx DevelopmentDividend

Note The bars depict the simple correlation between good governance and development outcomes The line depicts thepredicted value when taking into account the causality effects (ldquoDevelopment Dividendrdquo) from improved governance to betterdevelopment outcomes For data and methodological details visit httpwwwworldbankorgwbigovernance

Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000

Good Governance

-10

00

10

20

O ECD East Asia NIC Eastern Europe Middle East NAfrica

Latin America East Asiaemerging

Sub-SaharanAfrica

Former SovietUnion

South Asia

Rule of Law

Control of Corruption

Voice and Accountability

Poor Governance

Source Governance Research Indicators (KKZ) based from data in D Kaufmann and A Kraay Growth without Governance for 175 countries details at httpwwwworldbankorgwbigovernancepubsgrowthgovhtm Units in vertical axis are expressed in terms of standard deviations around zero Country and regional average estimates are subject to margins of error (illustrated by thin line atop each column) implying caution in interpretation of the estimates and that no precise country rating is warranted See also regional clarifications in note 6

Figure 5 Transparency and GDP Growth

1

3

5

Low Middle High

Extent of Transparency

Transparent Information by GovernmentEffective Parliamentary OversightCorporate Ethics

Annual GDP Growth ()

Source Annual GDP growth over 1999-2001 is taken from WDI 2002 GDP is computed in PPP terms The various transparency governance variables drawn from Executive Opinion Survey 2002

Cor

rupt

ion

Cor

rupt

ion

High

Low

Corruption is associated with absence of Civil Liberties

Not Free Partly Free Free

Based on averages of data from 160 countries Civil Liberties

Control of Graft and Freedom of the Press

AGOALB

AREARG

ARM

AUSAUT

AZE

BEN

BFABGDBGR

BHR

BHS

BIHBLR

BOL

BRABRN

BWA

CANCHE

CHL

CHNCIV

CMR

COGCOL

CRICUB

CYP

CZE

DEU

DNK

DOMDZA ECU

EGY

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHA

GIN

GMBGNB

GRC

GTM

GUY

HKG

HND

HRVHTI

HUN

IDN

IND

IRL

IRN

IRG

ISL

ISR

ITA

JAMJOR

JPN

KAZKENKGZ

KOR

KWT

LBN

LBRLBY

LKALSO

LTU

LUX

LVA

MAR

MDA MDGMEX

MKD MLI

MLT

MMR

MNG

MOZ

MUS

MWI

MYSNAM

NER

NGA NIC

NLDNOR

NZL

OMN

PAKPAN

PER PHL

PNG

POL

PRK

PRT

PRY

QAT

ROMRUSSAU

SDN

SEN

SGP

SLESLV

SOM

SURSVK

SVN

SWE

SWZ

SYRTCD

TGO THA

TJK TKM

TTO

TUN

TUR

TWN

TZA

UGA

UKR

URY

USA

UZBVEN

VNM

YEMYUG

ZAF

ZAR

ZMBZWE

r = 068-25

-2-15

-1-05

005

115

225

0 02 04 06 08 1

High

Low

Low High

r = 68

Freedom of the Press (Freedom House)

Con

trol o

f Gra

ft [k

kz]

Overall Evidence is Sobering howeverProgress on Governance is modest at best so far

Evidence points to slow if any average progress worldwide on key dimensions of governance

This contrasts with some other development dimensions (eg quality of infrastructure quality of mathscience education effective absorption of new technologies) where progress is apparent

At the same time substantial variation cross-country even within a region Some successes

0

15

3

1984-1988 1989-1993 1994-1998 1999-2001

TRANSITION

EMERGING

OECD+NIC

Source lsquoRethinking Governancersquo based on calculations from WDI Y-axis measures the log value of the average inflation for each region across each period

Significant Decline in Inflation Rates WorldwideHighInflation

Low

(avg inlogs)

15

4

65

1997 1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

EasternEurope

East AsiaDeveloping

Latin America

Former SovietUnion

South Asia

Quality of Infrastructure(Regional Averages of HighLow Quality every year GCR 1997-2002)

Low

High

1

2

3

4

5

6

1984-1988 1989-1993 1994-1998 1999 2000 2001

Emerging amp Transition Economies

Source ICRGPRS 1984-2001 data subject to margins of error

Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG

Poor

Good

2

425

65

1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

East AsiaDeveloping

Eastern Europe

Latin America

Former SovietUnion

Extent of Independence of the Judiciary (Regional Averages of ExtentLack of Independence every year)

Non-Independent

Independent

From From lsquolsquoresearchresearchrsquorsquo to policy into policy in--country focuscountry focusA demand-driven process to improve governance build local capacity and consensus among key stakeholdersKey elements participation transparency and analytical rigor (diagnostic surveys)Outcomes greater local capacity new policy actors baseline governance data and action plan for policy reform

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 7: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Each of the 3 main components of governance can be unbundled into 2 subcomponentsVoice and AccountabilityPolitical Stability and lack of ViolenceQuality Regulatory FrameworkGovernment EffectivenessControl of CorruptionRule of Law

Building Aggregate Governance IndicatorsUse Unobserved Components Model (UCM) to construct composite governance indicators and margins of error for each country

Estimate of governance weighted average of observed scores for each country re-scaled to common units

Weights are proportional to precision of underlying data sources

Precision depends on how strongly individual sources are correlated with each other

Margins of error reflect (a) number of sources in which a country appears and (b) the precision of those sources

Inputs for Governance Indicators 2002Publisher Publication Source Country Coverage

bullWefarsquos DRIMcGraw-Hill Country Risk Review Poll 117 developed and developing

bullBusiness Env Risk Intelligence BERI Survey 50115 developed and developing

bullColumbia University Columbia U State Failure Poll 84 developed and developing

bullWorld Bank Country Policy amp Institution Assmnt Poll 136 developing

bullGallup International Voice of the People Survey 47 developed and developing

bullBusiness Env Risk Intelligence BERI Survey 50115 developed and developing

bullEBRD Transition Report Poll 27 transition economies

bullEconomist Intelligence Unit Country Indicators Poll 115 developed and developing

bullFreedom House Freedom in the World Poll 192 developed and developing

bullFreedom House Nations in Transit Poll 27 transition economies

bullWorld Economic ForumCID Global Competitiveness Survey 80 developed and developing

bullHeritage Foundation Economic Freedom Index Poll 156 developed and developing

bullLatino-barometro LBO Survey 17 developing

bullPolitical Risk Services International Country Risk Guide Poll 140 developed and developing

bullReporters Without Borders Reporters sans frontieres (RSF) Survey 138 developed and developing

bullWorld BankEBRD BEEPS Survey 27 transition economies

bullIMD Lausanne World Competitiveness Yearbook Survey 49 developed and developing

bullBinghamton Univ Human Rights Violations Research Survey 140 developed and developing

Control of Corruption one Aggregate Indicator (selected countries for illustration based on 200001 research data)

-25

0

25

Cong

o D

em R

ep (

Zaire

)

KENY

A

ZIM

BABW

E

INDO

NESI

A

TANZ

ANIA

KORE

A N

ORT

H

HAIT

I

MO

LDO

VA

ARM

ENIA

VIET

NAM

IVO

RY C

OAS

T

BANG

LADE

SH

ALBA

NIA

INDI

A

CHIN

A

MEX

ICO

BULG

ARIA

CRO

ATIA

MO

ZAM

BIQ

UE

MAL

AYSI

A

URUG

UAY

TUNI

SIA

COST

A RI

CA

BOTS

WAN

A

CYPR

US

NAM

IBIA

CHIL

E

NEW

ZEA

LAND

Source KKZ 200001

POOR GOOD

CorruptionLevel

Margin of Error

Good Corruption Control

Rule of Law 1998 vs 2000 ndash Latin America

Source for data httpwwwworldbankorgwbigovernancegovdata2001htm Chart downloaded from httpinfoworldbankorggovernancekkzNote the thin lines depict 90 confidence intervals Colors are assigned according to the following criteria Red 25 or less rank worse Orange between 25 and 50 Yellow between 50 and 75 Light Green between 75 and 90 Dark Green above 90

lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000

Source for data httpwwwworldbankorgwbigovernancegovdata2001htm Map downloaded from httpinfoworldbankorggovernancekkzgov2001mapasp Colors are assigned according to the following criteria Red 25 or less rank worse Orange between 25 and 50 Yellow between 50 and 75 Light Green between75 and 90 Dark Green above 90

Governance and Poverty Nexus IGovernance and Poverty Nexus I

Lower Investment and Growth

Unsound economicinstitutional policies due to vested interests

Distorted allocation of public expendituresinvestments

Low human capital accumulation

Elite corporate interests capture laws and distort policymaking

Absence of rule of law and property rights

Governance obstacles to private sector development

Lack of Health and Education

bull Low human capital accumulation

bull Lower quality of education and health care

Conthellip

Governance and Poverty contGovernance and Poverty cont

Poor have Smaller share in Growth

State capture by elite of government policies and resource allocationRegressiveness of bribery ldquotaxrdquo on small firms and the poorRegressiveness in public expenditures and investmentsUnequal income distribution

Bribery imposes regressive tax and impairs access and quality of basic services for health education and justicePolitical capture by elites of access to particular services

Impaired Access to Public Services

The lsquoDividendrsquo of Good GovernanceInfant Mortality and Corruption

0

10

20

30

40

50

60

70

80

90

Weak Average Good

Control of Corruption x Development Dividend

0

2000

4000

6000

8000

10000

12000

Weak Average Good

Regulatory Burdenx Development Dividend

Per Capita Income and Regulatory Burden

Literacy and Rule of Law

0

25

50

75

100

Weak Average Good

Rule of Law x Development Dividend

Per Capita Income andVoice and Accountability

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Weak Average Strong

Voice and Accountabilityx DevelopmentDividend

Note The bars depict the simple correlation between good governance and development outcomes The line depicts thepredicted value when taking into account the causality effects (ldquoDevelopment Dividendrdquo) from improved governance to betterdevelopment outcomes For data and methodological details visit httpwwwworldbankorgwbigovernance

Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000

Good Governance

-10

00

10

20

O ECD East Asia NIC Eastern Europe Middle East NAfrica

Latin America East Asiaemerging

Sub-SaharanAfrica

Former SovietUnion

South Asia

Rule of Law

Control of Corruption

Voice and Accountability

Poor Governance

Source Governance Research Indicators (KKZ) based from data in D Kaufmann and A Kraay Growth without Governance for 175 countries details at httpwwwworldbankorgwbigovernancepubsgrowthgovhtm Units in vertical axis are expressed in terms of standard deviations around zero Country and regional average estimates are subject to margins of error (illustrated by thin line atop each column) implying caution in interpretation of the estimates and that no precise country rating is warranted See also regional clarifications in note 6

Figure 5 Transparency and GDP Growth

1

3

5

Low Middle High

Extent of Transparency

Transparent Information by GovernmentEffective Parliamentary OversightCorporate Ethics

Annual GDP Growth ()

Source Annual GDP growth over 1999-2001 is taken from WDI 2002 GDP is computed in PPP terms The various transparency governance variables drawn from Executive Opinion Survey 2002

Cor

rupt

ion

Cor

rupt

ion

High

Low

Corruption is associated with absence of Civil Liberties

Not Free Partly Free Free

Based on averages of data from 160 countries Civil Liberties

Control of Graft and Freedom of the Press

AGOALB

AREARG

ARM

AUSAUT

AZE

BEN

BFABGDBGR

BHR

BHS

BIHBLR

BOL

BRABRN

BWA

CANCHE

CHL

CHNCIV

CMR

COGCOL

CRICUB

CYP

CZE

DEU

DNK

DOMDZA ECU

EGY

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHA

GIN

GMBGNB

GRC

GTM

GUY

HKG

HND

HRVHTI

HUN

IDN

IND

IRL

IRN

IRG

ISL

ISR

ITA

JAMJOR

JPN

KAZKENKGZ

KOR

KWT

LBN

LBRLBY

LKALSO

LTU

LUX

LVA

MAR

MDA MDGMEX

MKD MLI

MLT

MMR

MNG

MOZ

MUS

MWI

MYSNAM

NER

NGA NIC

NLDNOR

NZL

OMN

PAKPAN

PER PHL

PNG

POL

PRK

PRT

PRY

QAT

ROMRUSSAU

SDN

SEN

SGP

SLESLV

SOM

SURSVK

SVN

SWE

SWZ

SYRTCD

TGO THA

TJK TKM

TTO

TUN

TUR

TWN

TZA

UGA

UKR

URY

USA

UZBVEN

VNM

YEMYUG

ZAF

ZAR

ZMBZWE

r = 068-25

-2-15

-1-05

005

115

225

0 02 04 06 08 1

High

Low

Low High

r = 68

Freedom of the Press (Freedom House)

Con

trol o

f Gra

ft [k

kz]

Overall Evidence is Sobering howeverProgress on Governance is modest at best so far

Evidence points to slow if any average progress worldwide on key dimensions of governance

This contrasts with some other development dimensions (eg quality of infrastructure quality of mathscience education effective absorption of new technologies) where progress is apparent

At the same time substantial variation cross-country even within a region Some successes

0

15

3

1984-1988 1989-1993 1994-1998 1999-2001

TRANSITION

EMERGING

OECD+NIC

Source lsquoRethinking Governancersquo based on calculations from WDI Y-axis measures the log value of the average inflation for each region across each period

Significant Decline in Inflation Rates WorldwideHighInflation

Low

(avg inlogs)

15

4

65

1997 1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

EasternEurope

East AsiaDeveloping

Latin America

Former SovietUnion

South Asia

Quality of Infrastructure(Regional Averages of HighLow Quality every year GCR 1997-2002)

Low

High

1

2

3

4

5

6

1984-1988 1989-1993 1994-1998 1999 2000 2001

Emerging amp Transition Economies

Source ICRGPRS 1984-2001 data subject to margins of error

Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG

Poor

Good

2

425

65

1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

East AsiaDeveloping

Eastern Europe

Latin America

Former SovietUnion

Extent of Independence of the Judiciary (Regional Averages of ExtentLack of Independence every year)

Non-Independent

Independent

From From lsquolsquoresearchresearchrsquorsquo to policy into policy in--country focuscountry focusA demand-driven process to improve governance build local capacity and consensus among key stakeholdersKey elements participation transparency and analytical rigor (diagnostic surveys)Outcomes greater local capacity new policy actors baseline governance data and action plan for policy reform

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 8: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Building Aggregate Governance IndicatorsUse Unobserved Components Model (UCM) to construct composite governance indicators and margins of error for each country

Estimate of governance weighted average of observed scores for each country re-scaled to common units

Weights are proportional to precision of underlying data sources

Precision depends on how strongly individual sources are correlated with each other

Margins of error reflect (a) number of sources in which a country appears and (b) the precision of those sources

Inputs for Governance Indicators 2002Publisher Publication Source Country Coverage

bullWefarsquos DRIMcGraw-Hill Country Risk Review Poll 117 developed and developing

bullBusiness Env Risk Intelligence BERI Survey 50115 developed and developing

bullColumbia University Columbia U State Failure Poll 84 developed and developing

bullWorld Bank Country Policy amp Institution Assmnt Poll 136 developing

bullGallup International Voice of the People Survey 47 developed and developing

bullBusiness Env Risk Intelligence BERI Survey 50115 developed and developing

bullEBRD Transition Report Poll 27 transition economies

bullEconomist Intelligence Unit Country Indicators Poll 115 developed and developing

bullFreedom House Freedom in the World Poll 192 developed and developing

bullFreedom House Nations in Transit Poll 27 transition economies

bullWorld Economic ForumCID Global Competitiveness Survey 80 developed and developing

bullHeritage Foundation Economic Freedom Index Poll 156 developed and developing

bullLatino-barometro LBO Survey 17 developing

bullPolitical Risk Services International Country Risk Guide Poll 140 developed and developing

bullReporters Without Borders Reporters sans frontieres (RSF) Survey 138 developed and developing

bullWorld BankEBRD BEEPS Survey 27 transition economies

bullIMD Lausanne World Competitiveness Yearbook Survey 49 developed and developing

bullBinghamton Univ Human Rights Violations Research Survey 140 developed and developing

Control of Corruption one Aggregate Indicator (selected countries for illustration based on 200001 research data)

-25

0

25

Cong

o D

em R

ep (

Zaire

)

KENY

A

ZIM

BABW

E

INDO

NESI

A

TANZ

ANIA

KORE

A N

ORT

H

HAIT

I

MO

LDO

VA

ARM

ENIA

VIET

NAM

IVO

RY C

OAS

T

BANG

LADE

SH

ALBA

NIA

INDI

A

CHIN

A

MEX

ICO

BULG

ARIA

CRO

ATIA

MO

ZAM

BIQ

UE

MAL

AYSI

A

URUG

UAY

TUNI

SIA

COST

A RI

CA

BOTS

WAN

A

CYPR

US

NAM

IBIA

CHIL

E

NEW

ZEA

LAND

Source KKZ 200001

POOR GOOD

CorruptionLevel

Margin of Error

Good Corruption Control

Rule of Law 1998 vs 2000 ndash Latin America

Source for data httpwwwworldbankorgwbigovernancegovdata2001htm Chart downloaded from httpinfoworldbankorggovernancekkzNote the thin lines depict 90 confidence intervals Colors are assigned according to the following criteria Red 25 or less rank worse Orange between 25 and 50 Yellow between 50 and 75 Light Green between 75 and 90 Dark Green above 90

lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000

Source for data httpwwwworldbankorgwbigovernancegovdata2001htm Map downloaded from httpinfoworldbankorggovernancekkzgov2001mapasp Colors are assigned according to the following criteria Red 25 or less rank worse Orange between 25 and 50 Yellow between 50 and 75 Light Green between75 and 90 Dark Green above 90

Governance and Poverty Nexus IGovernance and Poverty Nexus I

Lower Investment and Growth

Unsound economicinstitutional policies due to vested interests

Distorted allocation of public expendituresinvestments

Low human capital accumulation

Elite corporate interests capture laws and distort policymaking

Absence of rule of law and property rights

Governance obstacles to private sector development

Lack of Health and Education

bull Low human capital accumulation

bull Lower quality of education and health care

Conthellip

Governance and Poverty contGovernance and Poverty cont

Poor have Smaller share in Growth

State capture by elite of government policies and resource allocationRegressiveness of bribery ldquotaxrdquo on small firms and the poorRegressiveness in public expenditures and investmentsUnequal income distribution

Bribery imposes regressive tax and impairs access and quality of basic services for health education and justicePolitical capture by elites of access to particular services

Impaired Access to Public Services

The lsquoDividendrsquo of Good GovernanceInfant Mortality and Corruption

0

10

20

30

40

50

60

70

80

90

Weak Average Good

Control of Corruption x Development Dividend

0

2000

4000

6000

8000

10000

12000

Weak Average Good

Regulatory Burdenx Development Dividend

Per Capita Income and Regulatory Burden

Literacy and Rule of Law

0

25

50

75

100

Weak Average Good

Rule of Law x Development Dividend

Per Capita Income andVoice and Accountability

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Weak Average Strong

Voice and Accountabilityx DevelopmentDividend

Note The bars depict the simple correlation between good governance and development outcomes The line depicts thepredicted value when taking into account the causality effects (ldquoDevelopment Dividendrdquo) from improved governance to betterdevelopment outcomes For data and methodological details visit httpwwwworldbankorgwbigovernance

Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000

Good Governance

-10

00

10

20

O ECD East Asia NIC Eastern Europe Middle East NAfrica

Latin America East Asiaemerging

Sub-SaharanAfrica

Former SovietUnion

South Asia

Rule of Law

Control of Corruption

Voice and Accountability

Poor Governance

Source Governance Research Indicators (KKZ) based from data in D Kaufmann and A Kraay Growth without Governance for 175 countries details at httpwwwworldbankorgwbigovernancepubsgrowthgovhtm Units in vertical axis are expressed in terms of standard deviations around zero Country and regional average estimates are subject to margins of error (illustrated by thin line atop each column) implying caution in interpretation of the estimates and that no precise country rating is warranted See also regional clarifications in note 6

Figure 5 Transparency and GDP Growth

1

3

5

Low Middle High

Extent of Transparency

Transparent Information by GovernmentEffective Parliamentary OversightCorporate Ethics

Annual GDP Growth ()

Source Annual GDP growth over 1999-2001 is taken from WDI 2002 GDP is computed in PPP terms The various transparency governance variables drawn from Executive Opinion Survey 2002

Cor

rupt

ion

Cor

rupt

ion

High

Low

Corruption is associated with absence of Civil Liberties

Not Free Partly Free Free

Based on averages of data from 160 countries Civil Liberties

Control of Graft and Freedom of the Press

AGOALB

AREARG

ARM

AUSAUT

AZE

BEN

BFABGDBGR

BHR

BHS

BIHBLR

BOL

BRABRN

BWA

CANCHE

CHL

CHNCIV

CMR

COGCOL

CRICUB

CYP

CZE

DEU

DNK

DOMDZA ECU

EGY

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHA

GIN

GMBGNB

GRC

GTM

GUY

HKG

HND

HRVHTI

HUN

IDN

IND

IRL

IRN

IRG

ISL

ISR

ITA

JAMJOR

JPN

KAZKENKGZ

KOR

KWT

LBN

LBRLBY

LKALSO

LTU

LUX

LVA

MAR

MDA MDGMEX

MKD MLI

MLT

MMR

MNG

MOZ

MUS

MWI

MYSNAM

NER

NGA NIC

NLDNOR

NZL

OMN

PAKPAN

PER PHL

PNG

POL

PRK

PRT

PRY

QAT

ROMRUSSAU

SDN

SEN

SGP

SLESLV

SOM

SURSVK

SVN

SWE

SWZ

SYRTCD

TGO THA

TJK TKM

TTO

TUN

TUR

TWN

TZA

UGA

UKR

URY

USA

UZBVEN

VNM

YEMYUG

ZAF

ZAR

ZMBZWE

r = 068-25

-2-15

-1-05

005

115

225

0 02 04 06 08 1

High

Low

Low High

r = 68

Freedom of the Press (Freedom House)

Con

trol o

f Gra

ft [k

kz]

Overall Evidence is Sobering howeverProgress on Governance is modest at best so far

Evidence points to slow if any average progress worldwide on key dimensions of governance

This contrasts with some other development dimensions (eg quality of infrastructure quality of mathscience education effective absorption of new technologies) where progress is apparent

At the same time substantial variation cross-country even within a region Some successes

0

15

3

1984-1988 1989-1993 1994-1998 1999-2001

TRANSITION

EMERGING

OECD+NIC

Source lsquoRethinking Governancersquo based on calculations from WDI Y-axis measures the log value of the average inflation for each region across each period

Significant Decline in Inflation Rates WorldwideHighInflation

Low

(avg inlogs)

15

4

65

1997 1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

EasternEurope

East AsiaDeveloping

Latin America

Former SovietUnion

South Asia

Quality of Infrastructure(Regional Averages of HighLow Quality every year GCR 1997-2002)

Low

High

1

2

3

4

5

6

1984-1988 1989-1993 1994-1998 1999 2000 2001

Emerging amp Transition Economies

Source ICRGPRS 1984-2001 data subject to margins of error

Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG

Poor

Good

2

425

65

1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

East AsiaDeveloping

Eastern Europe

Latin America

Former SovietUnion

Extent of Independence of the Judiciary (Regional Averages of ExtentLack of Independence every year)

Non-Independent

Independent

From From lsquolsquoresearchresearchrsquorsquo to policy into policy in--country focuscountry focusA demand-driven process to improve governance build local capacity and consensus among key stakeholdersKey elements participation transparency and analytical rigor (diagnostic surveys)Outcomes greater local capacity new policy actors baseline governance data and action plan for policy reform

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 9: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Inputs for Governance Indicators 2002Publisher Publication Source Country Coverage

bullWefarsquos DRIMcGraw-Hill Country Risk Review Poll 117 developed and developing

bullBusiness Env Risk Intelligence BERI Survey 50115 developed and developing

bullColumbia University Columbia U State Failure Poll 84 developed and developing

bullWorld Bank Country Policy amp Institution Assmnt Poll 136 developing

bullGallup International Voice of the People Survey 47 developed and developing

bullBusiness Env Risk Intelligence BERI Survey 50115 developed and developing

bullEBRD Transition Report Poll 27 transition economies

bullEconomist Intelligence Unit Country Indicators Poll 115 developed and developing

bullFreedom House Freedom in the World Poll 192 developed and developing

bullFreedom House Nations in Transit Poll 27 transition economies

bullWorld Economic ForumCID Global Competitiveness Survey 80 developed and developing

bullHeritage Foundation Economic Freedom Index Poll 156 developed and developing

bullLatino-barometro LBO Survey 17 developing

bullPolitical Risk Services International Country Risk Guide Poll 140 developed and developing

bullReporters Without Borders Reporters sans frontieres (RSF) Survey 138 developed and developing

bullWorld BankEBRD BEEPS Survey 27 transition economies

bullIMD Lausanne World Competitiveness Yearbook Survey 49 developed and developing

bullBinghamton Univ Human Rights Violations Research Survey 140 developed and developing

Control of Corruption one Aggregate Indicator (selected countries for illustration based on 200001 research data)

-25

0

25

Cong

o D

em R

ep (

Zaire

)

KENY

A

ZIM

BABW

E

INDO

NESI

A

TANZ

ANIA

KORE

A N

ORT

H

HAIT

I

MO

LDO

VA

ARM

ENIA

VIET

NAM

IVO

RY C

OAS

T

BANG

LADE

SH

ALBA

NIA

INDI

A

CHIN

A

MEX

ICO

BULG

ARIA

CRO

ATIA

MO

ZAM

BIQ

UE

MAL

AYSI

A

URUG

UAY

TUNI

SIA

COST

A RI

CA

BOTS

WAN

A

CYPR

US

NAM

IBIA

CHIL

E

NEW

ZEA

LAND

Source KKZ 200001

POOR GOOD

CorruptionLevel

Margin of Error

Good Corruption Control

Rule of Law 1998 vs 2000 ndash Latin America

Source for data httpwwwworldbankorgwbigovernancegovdata2001htm Chart downloaded from httpinfoworldbankorggovernancekkzNote the thin lines depict 90 confidence intervals Colors are assigned according to the following criteria Red 25 or less rank worse Orange between 25 and 50 Yellow between 50 and 75 Light Green between 75 and 90 Dark Green above 90

lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000

Source for data httpwwwworldbankorgwbigovernancegovdata2001htm Map downloaded from httpinfoworldbankorggovernancekkzgov2001mapasp Colors are assigned according to the following criteria Red 25 or less rank worse Orange between 25 and 50 Yellow between 50 and 75 Light Green between75 and 90 Dark Green above 90

Governance and Poverty Nexus IGovernance and Poverty Nexus I

Lower Investment and Growth

Unsound economicinstitutional policies due to vested interests

Distorted allocation of public expendituresinvestments

Low human capital accumulation

Elite corporate interests capture laws and distort policymaking

Absence of rule of law and property rights

Governance obstacles to private sector development

Lack of Health and Education

bull Low human capital accumulation

bull Lower quality of education and health care

Conthellip

Governance and Poverty contGovernance and Poverty cont

Poor have Smaller share in Growth

State capture by elite of government policies and resource allocationRegressiveness of bribery ldquotaxrdquo on small firms and the poorRegressiveness in public expenditures and investmentsUnequal income distribution

Bribery imposes regressive tax and impairs access and quality of basic services for health education and justicePolitical capture by elites of access to particular services

Impaired Access to Public Services

The lsquoDividendrsquo of Good GovernanceInfant Mortality and Corruption

0

10

20

30

40

50

60

70

80

90

Weak Average Good

Control of Corruption x Development Dividend

0

2000

4000

6000

8000

10000

12000

Weak Average Good

Regulatory Burdenx Development Dividend

Per Capita Income and Regulatory Burden

Literacy and Rule of Law

0

25

50

75

100

Weak Average Good

Rule of Law x Development Dividend

Per Capita Income andVoice and Accountability

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Weak Average Strong

Voice and Accountabilityx DevelopmentDividend

Note The bars depict the simple correlation between good governance and development outcomes The line depicts thepredicted value when taking into account the causality effects (ldquoDevelopment Dividendrdquo) from improved governance to betterdevelopment outcomes For data and methodological details visit httpwwwworldbankorgwbigovernance

Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000

Good Governance

-10

00

10

20

O ECD East Asia NIC Eastern Europe Middle East NAfrica

Latin America East Asiaemerging

Sub-SaharanAfrica

Former SovietUnion

South Asia

Rule of Law

Control of Corruption

Voice and Accountability

Poor Governance

Source Governance Research Indicators (KKZ) based from data in D Kaufmann and A Kraay Growth without Governance for 175 countries details at httpwwwworldbankorgwbigovernancepubsgrowthgovhtm Units in vertical axis are expressed in terms of standard deviations around zero Country and regional average estimates are subject to margins of error (illustrated by thin line atop each column) implying caution in interpretation of the estimates and that no precise country rating is warranted See also regional clarifications in note 6

Figure 5 Transparency and GDP Growth

1

3

5

Low Middle High

Extent of Transparency

Transparent Information by GovernmentEffective Parliamentary OversightCorporate Ethics

Annual GDP Growth ()

Source Annual GDP growth over 1999-2001 is taken from WDI 2002 GDP is computed in PPP terms The various transparency governance variables drawn from Executive Opinion Survey 2002

Cor

rupt

ion

Cor

rupt

ion

High

Low

Corruption is associated with absence of Civil Liberties

Not Free Partly Free Free

Based on averages of data from 160 countries Civil Liberties

Control of Graft and Freedom of the Press

AGOALB

AREARG

ARM

AUSAUT

AZE

BEN

BFABGDBGR

BHR

BHS

BIHBLR

BOL

BRABRN

BWA

CANCHE

CHL

CHNCIV

CMR

COGCOL

CRICUB

CYP

CZE

DEU

DNK

DOMDZA ECU

EGY

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHA

GIN

GMBGNB

GRC

GTM

GUY

HKG

HND

HRVHTI

HUN

IDN

IND

IRL

IRN

IRG

ISL

ISR

ITA

JAMJOR

JPN

KAZKENKGZ

KOR

KWT

LBN

LBRLBY

LKALSO

LTU

LUX

LVA

MAR

MDA MDGMEX

MKD MLI

MLT

MMR

MNG

MOZ

MUS

MWI

MYSNAM

NER

NGA NIC

NLDNOR

NZL

OMN

PAKPAN

PER PHL

PNG

POL

PRK

PRT

PRY

QAT

ROMRUSSAU

SDN

SEN

SGP

SLESLV

SOM

SURSVK

SVN

SWE

SWZ

SYRTCD

TGO THA

TJK TKM

TTO

TUN

TUR

TWN

TZA

UGA

UKR

URY

USA

UZBVEN

VNM

YEMYUG

ZAF

ZAR

ZMBZWE

r = 068-25

-2-15

-1-05

005

115

225

0 02 04 06 08 1

High

Low

Low High

r = 68

Freedom of the Press (Freedom House)

Con

trol o

f Gra

ft [k

kz]

Overall Evidence is Sobering howeverProgress on Governance is modest at best so far

Evidence points to slow if any average progress worldwide on key dimensions of governance

This contrasts with some other development dimensions (eg quality of infrastructure quality of mathscience education effective absorption of new technologies) where progress is apparent

At the same time substantial variation cross-country even within a region Some successes

0

15

3

1984-1988 1989-1993 1994-1998 1999-2001

TRANSITION

EMERGING

OECD+NIC

Source lsquoRethinking Governancersquo based on calculations from WDI Y-axis measures the log value of the average inflation for each region across each period

Significant Decline in Inflation Rates WorldwideHighInflation

Low

(avg inlogs)

15

4

65

1997 1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

EasternEurope

East AsiaDeveloping

Latin America

Former SovietUnion

South Asia

Quality of Infrastructure(Regional Averages of HighLow Quality every year GCR 1997-2002)

Low

High

1

2

3

4

5

6

1984-1988 1989-1993 1994-1998 1999 2000 2001

Emerging amp Transition Economies

Source ICRGPRS 1984-2001 data subject to margins of error

Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG

Poor

Good

2

425

65

1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

East AsiaDeveloping

Eastern Europe

Latin America

Former SovietUnion

Extent of Independence of the Judiciary (Regional Averages of ExtentLack of Independence every year)

Non-Independent

Independent

From From lsquolsquoresearchresearchrsquorsquo to policy into policy in--country focuscountry focusA demand-driven process to improve governance build local capacity and consensus among key stakeholdersKey elements participation transparency and analytical rigor (diagnostic surveys)Outcomes greater local capacity new policy actors baseline governance data and action plan for policy reform

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 10: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Control of Corruption one Aggregate Indicator (selected countries for illustration based on 200001 research data)

-25

0

25

Cong

o D

em R

ep (

Zaire

)

KENY

A

ZIM

BABW

E

INDO

NESI

A

TANZ

ANIA

KORE

A N

ORT

H

HAIT

I

MO

LDO

VA

ARM

ENIA

VIET

NAM

IVO

RY C

OAS

T

BANG

LADE

SH

ALBA

NIA

INDI

A

CHIN

A

MEX

ICO

BULG

ARIA

CRO

ATIA

MO

ZAM

BIQ

UE

MAL

AYSI

A

URUG

UAY

TUNI

SIA

COST

A RI

CA

BOTS

WAN

A

CYPR

US

NAM

IBIA

CHIL

E

NEW

ZEA

LAND

Source KKZ 200001

POOR GOOD

CorruptionLevel

Margin of Error

Good Corruption Control

Rule of Law 1998 vs 2000 ndash Latin America

Source for data httpwwwworldbankorgwbigovernancegovdata2001htm Chart downloaded from httpinfoworldbankorggovernancekkzNote the thin lines depict 90 confidence intervals Colors are assigned according to the following criteria Red 25 or less rank worse Orange between 25 and 50 Yellow between 50 and 75 Light Green between 75 and 90 Dark Green above 90

lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000

Source for data httpwwwworldbankorgwbigovernancegovdata2001htm Map downloaded from httpinfoworldbankorggovernancekkzgov2001mapasp Colors are assigned according to the following criteria Red 25 or less rank worse Orange between 25 and 50 Yellow between 50 and 75 Light Green between75 and 90 Dark Green above 90

Governance and Poverty Nexus IGovernance and Poverty Nexus I

Lower Investment and Growth

Unsound economicinstitutional policies due to vested interests

Distorted allocation of public expendituresinvestments

Low human capital accumulation

Elite corporate interests capture laws and distort policymaking

Absence of rule of law and property rights

Governance obstacles to private sector development

Lack of Health and Education

bull Low human capital accumulation

bull Lower quality of education and health care

Conthellip

Governance and Poverty contGovernance and Poverty cont

Poor have Smaller share in Growth

State capture by elite of government policies and resource allocationRegressiveness of bribery ldquotaxrdquo on small firms and the poorRegressiveness in public expenditures and investmentsUnequal income distribution

Bribery imposes regressive tax and impairs access and quality of basic services for health education and justicePolitical capture by elites of access to particular services

Impaired Access to Public Services

The lsquoDividendrsquo of Good GovernanceInfant Mortality and Corruption

0

10

20

30

40

50

60

70

80

90

Weak Average Good

Control of Corruption x Development Dividend

0

2000

4000

6000

8000

10000

12000

Weak Average Good

Regulatory Burdenx Development Dividend

Per Capita Income and Regulatory Burden

Literacy and Rule of Law

0

25

50

75

100

Weak Average Good

Rule of Law x Development Dividend

Per Capita Income andVoice and Accountability

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Weak Average Strong

Voice and Accountabilityx DevelopmentDividend

Note The bars depict the simple correlation between good governance and development outcomes The line depicts thepredicted value when taking into account the causality effects (ldquoDevelopment Dividendrdquo) from improved governance to betterdevelopment outcomes For data and methodological details visit httpwwwworldbankorgwbigovernance

Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000

Good Governance

-10

00

10

20

O ECD East Asia NIC Eastern Europe Middle East NAfrica

Latin America East Asiaemerging

Sub-SaharanAfrica

Former SovietUnion

South Asia

Rule of Law

Control of Corruption

Voice and Accountability

Poor Governance

Source Governance Research Indicators (KKZ) based from data in D Kaufmann and A Kraay Growth without Governance for 175 countries details at httpwwwworldbankorgwbigovernancepubsgrowthgovhtm Units in vertical axis are expressed in terms of standard deviations around zero Country and regional average estimates are subject to margins of error (illustrated by thin line atop each column) implying caution in interpretation of the estimates and that no precise country rating is warranted See also regional clarifications in note 6

Figure 5 Transparency and GDP Growth

1

3

5

Low Middle High

Extent of Transparency

Transparent Information by GovernmentEffective Parliamentary OversightCorporate Ethics

Annual GDP Growth ()

Source Annual GDP growth over 1999-2001 is taken from WDI 2002 GDP is computed in PPP terms The various transparency governance variables drawn from Executive Opinion Survey 2002

Cor

rupt

ion

Cor

rupt

ion

High

Low

Corruption is associated with absence of Civil Liberties

Not Free Partly Free Free

Based on averages of data from 160 countries Civil Liberties

Control of Graft and Freedom of the Press

AGOALB

AREARG

ARM

AUSAUT

AZE

BEN

BFABGDBGR

BHR

BHS

BIHBLR

BOL

BRABRN

BWA

CANCHE

CHL

CHNCIV

CMR

COGCOL

CRICUB

CYP

CZE

DEU

DNK

DOMDZA ECU

EGY

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHA

GIN

GMBGNB

GRC

GTM

GUY

HKG

HND

HRVHTI

HUN

IDN

IND

IRL

IRN

IRG

ISL

ISR

ITA

JAMJOR

JPN

KAZKENKGZ

KOR

KWT

LBN

LBRLBY

LKALSO

LTU

LUX

LVA

MAR

MDA MDGMEX

MKD MLI

MLT

MMR

MNG

MOZ

MUS

MWI

MYSNAM

NER

NGA NIC

NLDNOR

NZL

OMN

PAKPAN

PER PHL

PNG

POL

PRK

PRT

PRY

QAT

ROMRUSSAU

SDN

SEN

SGP

SLESLV

SOM

SURSVK

SVN

SWE

SWZ

SYRTCD

TGO THA

TJK TKM

TTO

TUN

TUR

TWN

TZA

UGA

UKR

URY

USA

UZBVEN

VNM

YEMYUG

ZAF

ZAR

ZMBZWE

r = 068-25

-2-15

-1-05

005

115

225

0 02 04 06 08 1

High

Low

Low High

r = 68

Freedom of the Press (Freedom House)

Con

trol o

f Gra

ft [k

kz]

Overall Evidence is Sobering howeverProgress on Governance is modest at best so far

Evidence points to slow if any average progress worldwide on key dimensions of governance

This contrasts with some other development dimensions (eg quality of infrastructure quality of mathscience education effective absorption of new technologies) where progress is apparent

At the same time substantial variation cross-country even within a region Some successes

0

15

3

1984-1988 1989-1993 1994-1998 1999-2001

TRANSITION

EMERGING

OECD+NIC

Source lsquoRethinking Governancersquo based on calculations from WDI Y-axis measures the log value of the average inflation for each region across each period

Significant Decline in Inflation Rates WorldwideHighInflation

Low

(avg inlogs)

15

4

65

1997 1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

EasternEurope

East AsiaDeveloping

Latin America

Former SovietUnion

South Asia

Quality of Infrastructure(Regional Averages of HighLow Quality every year GCR 1997-2002)

Low

High

1

2

3

4

5

6

1984-1988 1989-1993 1994-1998 1999 2000 2001

Emerging amp Transition Economies

Source ICRGPRS 1984-2001 data subject to margins of error

Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG

Poor

Good

2

425

65

1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

East AsiaDeveloping

Eastern Europe

Latin America

Former SovietUnion

Extent of Independence of the Judiciary (Regional Averages of ExtentLack of Independence every year)

Non-Independent

Independent

From From lsquolsquoresearchresearchrsquorsquo to policy into policy in--country focuscountry focusA demand-driven process to improve governance build local capacity and consensus among key stakeholdersKey elements participation transparency and analytical rigor (diagnostic surveys)Outcomes greater local capacity new policy actors baseline governance data and action plan for policy reform

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 11: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Rule of Law 1998 vs 2000 ndash Latin America

Source for data httpwwwworldbankorgwbigovernancegovdata2001htm Chart downloaded from httpinfoworldbankorggovernancekkzNote the thin lines depict 90 confidence intervals Colors are assigned according to the following criteria Red 25 or less rank worse Orange between 25 and 50 Yellow between 50 and 75 Light Green between 75 and 90 Dark Green above 90

lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000

Source for data httpwwwworldbankorgwbigovernancegovdata2001htm Map downloaded from httpinfoworldbankorggovernancekkzgov2001mapasp Colors are assigned according to the following criteria Red 25 or less rank worse Orange between 25 and 50 Yellow between 50 and 75 Light Green between75 and 90 Dark Green above 90

Governance and Poverty Nexus IGovernance and Poverty Nexus I

Lower Investment and Growth

Unsound economicinstitutional policies due to vested interests

Distorted allocation of public expendituresinvestments

Low human capital accumulation

Elite corporate interests capture laws and distort policymaking

Absence of rule of law and property rights

Governance obstacles to private sector development

Lack of Health and Education

bull Low human capital accumulation

bull Lower quality of education and health care

Conthellip

Governance and Poverty contGovernance and Poverty cont

Poor have Smaller share in Growth

State capture by elite of government policies and resource allocationRegressiveness of bribery ldquotaxrdquo on small firms and the poorRegressiveness in public expenditures and investmentsUnequal income distribution

Bribery imposes regressive tax and impairs access and quality of basic services for health education and justicePolitical capture by elites of access to particular services

Impaired Access to Public Services

The lsquoDividendrsquo of Good GovernanceInfant Mortality and Corruption

0

10

20

30

40

50

60

70

80

90

Weak Average Good

Control of Corruption x Development Dividend

0

2000

4000

6000

8000

10000

12000

Weak Average Good

Regulatory Burdenx Development Dividend

Per Capita Income and Regulatory Burden

Literacy and Rule of Law

0

25

50

75

100

Weak Average Good

Rule of Law x Development Dividend

Per Capita Income andVoice and Accountability

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Weak Average Strong

Voice and Accountabilityx DevelopmentDividend

Note The bars depict the simple correlation between good governance and development outcomes The line depicts thepredicted value when taking into account the causality effects (ldquoDevelopment Dividendrdquo) from improved governance to betterdevelopment outcomes For data and methodological details visit httpwwwworldbankorgwbigovernance

Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000

Good Governance

-10

00

10

20

O ECD East Asia NIC Eastern Europe Middle East NAfrica

Latin America East Asiaemerging

Sub-SaharanAfrica

Former SovietUnion

South Asia

Rule of Law

Control of Corruption

Voice and Accountability

Poor Governance

Source Governance Research Indicators (KKZ) based from data in D Kaufmann and A Kraay Growth without Governance for 175 countries details at httpwwwworldbankorgwbigovernancepubsgrowthgovhtm Units in vertical axis are expressed in terms of standard deviations around zero Country and regional average estimates are subject to margins of error (illustrated by thin line atop each column) implying caution in interpretation of the estimates and that no precise country rating is warranted See also regional clarifications in note 6

Figure 5 Transparency and GDP Growth

1

3

5

Low Middle High

Extent of Transparency

Transparent Information by GovernmentEffective Parliamentary OversightCorporate Ethics

Annual GDP Growth ()

Source Annual GDP growth over 1999-2001 is taken from WDI 2002 GDP is computed in PPP terms The various transparency governance variables drawn from Executive Opinion Survey 2002

Cor

rupt

ion

Cor

rupt

ion

High

Low

Corruption is associated with absence of Civil Liberties

Not Free Partly Free Free

Based on averages of data from 160 countries Civil Liberties

Control of Graft and Freedom of the Press

AGOALB

AREARG

ARM

AUSAUT

AZE

BEN

BFABGDBGR

BHR

BHS

BIHBLR

BOL

BRABRN

BWA

CANCHE

CHL

CHNCIV

CMR

COGCOL

CRICUB

CYP

CZE

DEU

DNK

DOMDZA ECU

EGY

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHA

GIN

GMBGNB

GRC

GTM

GUY

HKG

HND

HRVHTI

HUN

IDN

IND

IRL

IRN

IRG

ISL

ISR

ITA

JAMJOR

JPN

KAZKENKGZ

KOR

KWT

LBN

LBRLBY

LKALSO

LTU

LUX

LVA

MAR

MDA MDGMEX

MKD MLI

MLT

MMR

MNG

MOZ

MUS

MWI

MYSNAM

NER

NGA NIC

NLDNOR

NZL

OMN

PAKPAN

PER PHL

PNG

POL

PRK

PRT

PRY

QAT

ROMRUSSAU

SDN

SEN

SGP

SLESLV

SOM

SURSVK

SVN

SWE

SWZ

SYRTCD

TGO THA

TJK TKM

TTO

TUN

TUR

TWN

TZA

UGA

UKR

URY

USA

UZBVEN

VNM

YEMYUG

ZAF

ZAR

ZMBZWE

r = 068-25

-2-15

-1-05

005

115

225

0 02 04 06 08 1

High

Low

Low High

r = 68

Freedom of the Press (Freedom House)

Con

trol o

f Gra

ft [k

kz]

Overall Evidence is Sobering howeverProgress on Governance is modest at best so far

Evidence points to slow if any average progress worldwide on key dimensions of governance

This contrasts with some other development dimensions (eg quality of infrastructure quality of mathscience education effective absorption of new technologies) where progress is apparent

At the same time substantial variation cross-country even within a region Some successes

0

15

3

1984-1988 1989-1993 1994-1998 1999-2001

TRANSITION

EMERGING

OECD+NIC

Source lsquoRethinking Governancersquo based on calculations from WDI Y-axis measures the log value of the average inflation for each region across each period

Significant Decline in Inflation Rates WorldwideHighInflation

Low

(avg inlogs)

15

4

65

1997 1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

EasternEurope

East AsiaDeveloping

Latin America

Former SovietUnion

South Asia

Quality of Infrastructure(Regional Averages of HighLow Quality every year GCR 1997-2002)

Low

High

1

2

3

4

5

6

1984-1988 1989-1993 1994-1998 1999 2000 2001

Emerging amp Transition Economies

Source ICRGPRS 1984-2001 data subject to margins of error

Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG

Poor

Good

2

425

65

1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

East AsiaDeveloping

Eastern Europe

Latin America

Former SovietUnion

Extent of Independence of the Judiciary (Regional Averages of ExtentLack of Independence every year)

Non-Independent

Independent

From From lsquolsquoresearchresearchrsquorsquo to policy into policy in--country focuscountry focusA demand-driven process to improve governance build local capacity and consensus among key stakeholdersKey elements participation transparency and analytical rigor (diagnostic surveys)Outcomes greater local capacity new policy actors baseline governance data and action plan for policy reform

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 12: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000

Source for data httpwwwworldbankorgwbigovernancegovdata2001htm Map downloaded from httpinfoworldbankorggovernancekkzgov2001mapasp Colors are assigned according to the following criteria Red 25 or less rank worse Orange between 25 and 50 Yellow between 50 and 75 Light Green between75 and 90 Dark Green above 90

Governance and Poverty Nexus IGovernance and Poverty Nexus I

Lower Investment and Growth

Unsound economicinstitutional policies due to vested interests

Distorted allocation of public expendituresinvestments

Low human capital accumulation

Elite corporate interests capture laws and distort policymaking

Absence of rule of law and property rights

Governance obstacles to private sector development

Lack of Health and Education

bull Low human capital accumulation

bull Lower quality of education and health care

Conthellip

Governance and Poverty contGovernance and Poverty cont

Poor have Smaller share in Growth

State capture by elite of government policies and resource allocationRegressiveness of bribery ldquotaxrdquo on small firms and the poorRegressiveness in public expenditures and investmentsUnequal income distribution

Bribery imposes regressive tax and impairs access and quality of basic services for health education and justicePolitical capture by elites of access to particular services

Impaired Access to Public Services

The lsquoDividendrsquo of Good GovernanceInfant Mortality and Corruption

0

10

20

30

40

50

60

70

80

90

Weak Average Good

Control of Corruption x Development Dividend

0

2000

4000

6000

8000

10000

12000

Weak Average Good

Regulatory Burdenx Development Dividend

Per Capita Income and Regulatory Burden

Literacy and Rule of Law

0

25

50

75

100

Weak Average Good

Rule of Law x Development Dividend

Per Capita Income andVoice and Accountability

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Weak Average Strong

Voice and Accountabilityx DevelopmentDividend

Note The bars depict the simple correlation between good governance and development outcomes The line depicts thepredicted value when taking into account the causality effects (ldquoDevelopment Dividendrdquo) from improved governance to betterdevelopment outcomes For data and methodological details visit httpwwwworldbankorgwbigovernance

Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000

Good Governance

-10

00

10

20

O ECD East Asia NIC Eastern Europe Middle East NAfrica

Latin America East Asiaemerging

Sub-SaharanAfrica

Former SovietUnion

South Asia

Rule of Law

Control of Corruption

Voice and Accountability

Poor Governance

Source Governance Research Indicators (KKZ) based from data in D Kaufmann and A Kraay Growth without Governance for 175 countries details at httpwwwworldbankorgwbigovernancepubsgrowthgovhtm Units in vertical axis are expressed in terms of standard deviations around zero Country and regional average estimates are subject to margins of error (illustrated by thin line atop each column) implying caution in interpretation of the estimates and that no precise country rating is warranted See also regional clarifications in note 6

Figure 5 Transparency and GDP Growth

1

3

5

Low Middle High

Extent of Transparency

Transparent Information by GovernmentEffective Parliamentary OversightCorporate Ethics

Annual GDP Growth ()

Source Annual GDP growth over 1999-2001 is taken from WDI 2002 GDP is computed in PPP terms The various transparency governance variables drawn from Executive Opinion Survey 2002

Cor

rupt

ion

Cor

rupt

ion

High

Low

Corruption is associated with absence of Civil Liberties

Not Free Partly Free Free

Based on averages of data from 160 countries Civil Liberties

Control of Graft and Freedom of the Press

AGOALB

AREARG

ARM

AUSAUT

AZE

BEN

BFABGDBGR

BHR

BHS

BIHBLR

BOL

BRABRN

BWA

CANCHE

CHL

CHNCIV

CMR

COGCOL

CRICUB

CYP

CZE

DEU

DNK

DOMDZA ECU

EGY

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHA

GIN

GMBGNB

GRC

GTM

GUY

HKG

HND

HRVHTI

HUN

IDN

IND

IRL

IRN

IRG

ISL

ISR

ITA

JAMJOR

JPN

KAZKENKGZ

KOR

KWT

LBN

LBRLBY

LKALSO

LTU

LUX

LVA

MAR

MDA MDGMEX

MKD MLI

MLT

MMR

MNG

MOZ

MUS

MWI

MYSNAM

NER

NGA NIC

NLDNOR

NZL

OMN

PAKPAN

PER PHL

PNG

POL

PRK

PRT

PRY

QAT

ROMRUSSAU

SDN

SEN

SGP

SLESLV

SOM

SURSVK

SVN

SWE

SWZ

SYRTCD

TGO THA

TJK TKM

TTO

TUN

TUR

TWN

TZA

UGA

UKR

URY

USA

UZBVEN

VNM

YEMYUG

ZAF

ZAR

ZMBZWE

r = 068-25

-2-15

-1-05

005

115

225

0 02 04 06 08 1

High

Low

Low High

r = 68

Freedom of the Press (Freedom House)

Con

trol o

f Gra

ft [k

kz]

Overall Evidence is Sobering howeverProgress on Governance is modest at best so far

Evidence points to slow if any average progress worldwide on key dimensions of governance

This contrasts with some other development dimensions (eg quality of infrastructure quality of mathscience education effective absorption of new technologies) where progress is apparent

At the same time substantial variation cross-country even within a region Some successes

0

15

3

1984-1988 1989-1993 1994-1998 1999-2001

TRANSITION

EMERGING

OECD+NIC

Source lsquoRethinking Governancersquo based on calculations from WDI Y-axis measures the log value of the average inflation for each region across each period

Significant Decline in Inflation Rates WorldwideHighInflation

Low

(avg inlogs)

15

4

65

1997 1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

EasternEurope

East AsiaDeveloping

Latin America

Former SovietUnion

South Asia

Quality of Infrastructure(Regional Averages of HighLow Quality every year GCR 1997-2002)

Low

High

1

2

3

4

5

6

1984-1988 1989-1993 1994-1998 1999 2000 2001

Emerging amp Transition Economies

Source ICRGPRS 1984-2001 data subject to margins of error

Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG

Poor

Good

2

425

65

1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

East AsiaDeveloping

Eastern Europe

Latin America

Former SovietUnion

Extent of Independence of the Judiciary (Regional Averages of ExtentLack of Independence every year)

Non-Independent

Independent

From From lsquolsquoresearchresearchrsquorsquo to policy into policy in--country focuscountry focusA demand-driven process to improve governance build local capacity and consensus among key stakeholdersKey elements participation transparency and analytical rigor (diagnostic surveys)Outcomes greater local capacity new policy actors baseline governance data and action plan for policy reform

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 13: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Governance and Poverty Nexus IGovernance and Poverty Nexus I

Lower Investment and Growth

Unsound economicinstitutional policies due to vested interests

Distorted allocation of public expendituresinvestments

Low human capital accumulation

Elite corporate interests capture laws and distort policymaking

Absence of rule of law and property rights

Governance obstacles to private sector development

Lack of Health and Education

bull Low human capital accumulation

bull Lower quality of education and health care

Conthellip

Governance and Poverty contGovernance and Poverty cont

Poor have Smaller share in Growth

State capture by elite of government policies and resource allocationRegressiveness of bribery ldquotaxrdquo on small firms and the poorRegressiveness in public expenditures and investmentsUnequal income distribution

Bribery imposes regressive tax and impairs access and quality of basic services for health education and justicePolitical capture by elites of access to particular services

Impaired Access to Public Services

The lsquoDividendrsquo of Good GovernanceInfant Mortality and Corruption

0

10

20

30

40

50

60

70

80

90

Weak Average Good

Control of Corruption x Development Dividend

0

2000

4000

6000

8000

10000

12000

Weak Average Good

Regulatory Burdenx Development Dividend

Per Capita Income and Regulatory Burden

Literacy and Rule of Law

0

25

50

75

100

Weak Average Good

Rule of Law x Development Dividend

Per Capita Income andVoice and Accountability

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Weak Average Strong

Voice and Accountabilityx DevelopmentDividend

Note The bars depict the simple correlation between good governance and development outcomes The line depicts thepredicted value when taking into account the causality effects (ldquoDevelopment Dividendrdquo) from improved governance to betterdevelopment outcomes For data and methodological details visit httpwwwworldbankorgwbigovernance

Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000

Good Governance

-10

00

10

20

O ECD East Asia NIC Eastern Europe Middle East NAfrica

Latin America East Asiaemerging

Sub-SaharanAfrica

Former SovietUnion

South Asia

Rule of Law

Control of Corruption

Voice and Accountability

Poor Governance

Source Governance Research Indicators (KKZ) based from data in D Kaufmann and A Kraay Growth without Governance for 175 countries details at httpwwwworldbankorgwbigovernancepubsgrowthgovhtm Units in vertical axis are expressed in terms of standard deviations around zero Country and regional average estimates are subject to margins of error (illustrated by thin line atop each column) implying caution in interpretation of the estimates and that no precise country rating is warranted See also regional clarifications in note 6

Figure 5 Transparency and GDP Growth

1

3

5

Low Middle High

Extent of Transparency

Transparent Information by GovernmentEffective Parliamentary OversightCorporate Ethics

Annual GDP Growth ()

Source Annual GDP growth over 1999-2001 is taken from WDI 2002 GDP is computed in PPP terms The various transparency governance variables drawn from Executive Opinion Survey 2002

Cor

rupt

ion

Cor

rupt

ion

High

Low

Corruption is associated with absence of Civil Liberties

Not Free Partly Free Free

Based on averages of data from 160 countries Civil Liberties

Control of Graft and Freedom of the Press

AGOALB

AREARG

ARM

AUSAUT

AZE

BEN

BFABGDBGR

BHR

BHS

BIHBLR

BOL

BRABRN

BWA

CANCHE

CHL

CHNCIV

CMR

COGCOL

CRICUB

CYP

CZE

DEU

DNK

DOMDZA ECU

EGY

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHA

GIN

GMBGNB

GRC

GTM

GUY

HKG

HND

HRVHTI

HUN

IDN

IND

IRL

IRN

IRG

ISL

ISR

ITA

JAMJOR

JPN

KAZKENKGZ

KOR

KWT

LBN

LBRLBY

LKALSO

LTU

LUX

LVA

MAR

MDA MDGMEX

MKD MLI

MLT

MMR

MNG

MOZ

MUS

MWI

MYSNAM

NER

NGA NIC

NLDNOR

NZL

OMN

PAKPAN

PER PHL

PNG

POL

PRK

PRT

PRY

QAT

ROMRUSSAU

SDN

SEN

SGP

SLESLV

SOM

SURSVK

SVN

SWE

SWZ

SYRTCD

TGO THA

TJK TKM

TTO

TUN

TUR

TWN

TZA

UGA

UKR

URY

USA

UZBVEN

VNM

YEMYUG

ZAF

ZAR

ZMBZWE

r = 068-25

-2-15

-1-05

005

115

225

0 02 04 06 08 1

High

Low

Low High

r = 68

Freedom of the Press (Freedom House)

Con

trol o

f Gra

ft [k

kz]

Overall Evidence is Sobering howeverProgress on Governance is modest at best so far

Evidence points to slow if any average progress worldwide on key dimensions of governance

This contrasts with some other development dimensions (eg quality of infrastructure quality of mathscience education effective absorption of new technologies) where progress is apparent

At the same time substantial variation cross-country even within a region Some successes

0

15

3

1984-1988 1989-1993 1994-1998 1999-2001

TRANSITION

EMERGING

OECD+NIC

Source lsquoRethinking Governancersquo based on calculations from WDI Y-axis measures the log value of the average inflation for each region across each period

Significant Decline in Inflation Rates WorldwideHighInflation

Low

(avg inlogs)

15

4

65

1997 1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

EasternEurope

East AsiaDeveloping

Latin America

Former SovietUnion

South Asia

Quality of Infrastructure(Regional Averages of HighLow Quality every year GCR 1997-2002)

Low

High

1

2

3

4

5

6

1984-1988 1989-1993 1994-1998 1999 2000 2001

Emerging amp Transition Economies

Source ICRGPRS 1984-2001 data subject to margins of error

Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG

Poor

Good

2

425

65

1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

East AsiaDeveloping

Eastern Europe

Latin America

Former SovietUnion

Extent of Independence of the Judiciary (Regional Averages of ExtentLack of Independence every year)

Non-Independent

Independent

From From lsquolsquoresearchresearchrsquorsquo to policy into policy in--country focuscountry focusA demand-driven process to improve governance build local capacity and consensus among key stakeholdersKey elements participation transparency and analytical rigor (diagnostic surveys)Outcomes greater local capacity new policy actors baseline governance data and action plan for policy reform

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 14: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Governance and Poverty contGovernance and Poverty cont

Poor have Smaller share in Growth

State capture by elite of government policies and resource allocationRegressiveness of bribery ldquotaxrdquo on small firms and the poorRegressiveness in public expenditures and investmentsUnequal income distribution

Bribery imposes regressive tax and impairs access and quality of basic services for health education and justicePolitical capture by elites of access to particular services

Impaired Access to Public Services

The lsquoDividendrsquo of Good GovernanceInfant Mortality and Corruption

0

10

20

30

40

50

60

70

80

90

Weak Average Good

Control of Corruption x Development Dividend

0

2000

4000

6000

8000

10000

12000

Weak Average Good

Regulatory Burdenx Development Dividend

Per Capita Income and Regulatory Burden

Literacy and Rule of Law

0

25

50

75

100

Weak Average Good

Rule of Law x Development Dividend

Per Capita Income andVoice and Accountability

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Weak Average Strong

Voice and Accountabilityx DevelopmentDividend

Note The bars depict the simple correlation between good governance and development outcomes The line depicts thepredicted value when taking into account the causality effects (ldquoDevelopment Dividendrdquo) from improved governance to betterdevelopment outcomes For data and methodological details visit httpwwwworldbankorgwbigovernance

Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000

Good Governance

-10

00

10

20

O ECD East Asia NIC Eastern Europe Middle East NAfrica

Latin America East Asiaemerging

Sub-SaharanAfrica

Former SovietUnion

South Asia

Rule of Law

Control of Corruption

Voice and Accountability

Poor Governance

Source Governance Research Indicators (KKZ) based from data in D Kaufmann and A Kraay Growth without Governance for 175 countries details at httpwwwworldbankorgwbigovernancepubsgrowthgovhtm Units in vertical axis are expressed in terms of standard deviations around zero Country and regional average estimates are subject to margins of error (illustrated by thin line atop each column) implying caution in interpretation of the estimates and that no precise country rating is warranted See also regional clarifications in note 6

Figure 5 Transparency and GDP Growth

1

3

5

Low Middle High

Extent of Transparency

Transparent Information by GovernmentEffective Parliamentary OversightCorporate Ethics

Annual GDP Growth ()

Source Annual GDP growth over 1999-2001 is taken from WDI 2002 GDP is computed in PPP terms The various transparency governance variables drawn from Executive Opinion Survey 2002

Cor

rupt

ion

Cor

rupt

ion

High

Low

Corruption is associated with absence of Civil Liberties

Not Free Partly Free Free

Based on averages of data from 160 countries Civil Liberties

Control of Graft and Freedom of the Press

AGOALB

AREARG

ARM

AUSAUT

AZE

BEN

BFABGDBGR

BHR

BHS

BIHBLR

BOL

BRABRN

BWA

CANCHE

CHL

CHNCIV

CMR

COGCOL

CRICUB

CYP

CZE

DEU

DNK

DOMDZA ECU

EGY

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHA

GIN

GMBGNB

GRC

GTM

GUY

HKG

HND

HRVHTI

HUN

IDN

IND

IRL

IRN

IRG

ISL

ISR

ITA

JAMJOR

JPN

KAZKENKGZ

KOR

KWT

LBN

LBRLBY

LKALSO

LTU

LUX

LVA

MAR

MDA MDGMEX

MKD MLI

MLT

MMR

MNG

MOZ

MUS

MWI

MYSNAM

NER

NGA NIC

NLDNOR

NZL

OMN

PAKPAN

PER PHL

PNG

POL

PRK

PRT

PRY

QAT

ROMRUSSAU

SDN

SEN

SGP

SLESLV

SOM

SURSVK

SVN

SWE

SWZ

SYRTCD

TGO THA

TJK TKM

TTO

TUN

TUR

TWN

TZA

UGA

UKR

URY

USA

UZBVEN

VNM

YEMYUG

ZAF

ZAR

ZMBZWE

r = 068-25

-2-15

-1-05

005

115

225

0 02 04 06 08 1

High

Low

Low High

r = 68

Freedom of the Press (Freedom House)

Con

trol o

f Gra

ft [k

kz]

Overall Evidence is Sobering howeverProgress on Governance is modest at best so far

Evidence points to slow if any average progress worldwide on key dimensions of governance

This contrasts with some other development dimensions (eg quality of infrastructure quality of mathscience education effective absorption of new technologies) where progress is apparent

At the same time substantial variation cross-country even within a region Some successes

0

15

3

1984-1988 1989-1993 1994-1998 1999-2001

TRANSITION

EMERGING

OECD+NIC

Source lsquoRethinking Governancersquo based on calculations from WDI Y-axis measures the log value of the average inflation for each region across each period

Significant Decline in Inflation Rates WorldwideHighInflation

Low

(avg inlogs)

15

4

65

1997 1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

EasternEurope

East AsiaDeveloping

Latin America

Former SovietUnion

South Asia

Quality of Infrastructure(Regional Averages of HighLow Quality every year GCR 1997-2002)

Low

High

1

2

3

4

5

6

1984-1988 1989-1993 1994-1998 1999 2000 2001

Emerging amp Transition Economies

Source ICRGPRS 1984-2001 data subject to margins of error

Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG

Poor

Good

2

425

65

1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

East AsiaDeveloping

Eastern Europe

Latin America

Former SovietUnion

Extent of Independence of the Judiciary (Regional Averages of ExtentLack of Independence every year)

Non-Independent

Independent

From From lsquolsquoresearchresearchrsquorsquo to policy into policy in--country focuscountry focusA demand-driven process to improve governance build local capacity and consensus among key stakeholdersKey elements participation transparency and analytical rigor (diagnostic surveys)Outcomes greater local capacity new policy actors baseline governance data and action plan for policy reform

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 15: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

The lsquoDividendrsquo of Good GovernanceInfant Mortality and Corruption

0

10

20

30

40

50

60

70

80

90

Weak Average Good

Control of Corruption x Development Dividend

0

2000

4000

6000

8000

10000

12000

Weak Average Good

Regulatory Burdenx Development Dividend

Per Capita Income and Regulatory Burden

Literacy and Rule of Law

0

25

50

75

100

Weak Average Good

Rule of Law x Development Dividend

Per Capita Income andVoice and Accountability

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Weak Average Strong

Voice and Accountabilityx DevelopmentDividend

Note The bars depict the simple correlation between good governance and development outcomes The line depicts thepredicted value when taking into account the causality effects (ldquoDevelopment Dividendrdquo) from improved governance to betterdevelopment outcomes For data and methodological details visit httpwwwworldbankorgwbigovernance

Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000

Good Governance

-10

00

10

20

O ECD East Asia NIC Eastern Europe Middle East NAfrica

Latin America East Asiaemerging

Sub-SaharanAfrica

Former SovietUnion

South Asia

Rule of Law

Control of Corruption

Voice and Accountability

Poor Governance

Source Governance Research Indicators (KKZ) based from data in D Kaufmann and A Kraay Growth without Governance for 175 countries details at httpwwwworldbankorgwbigovernancepubsgrowthgovhtm Units in vertical axis are expressed in terms of standard deviations around zero Country and regional average estimates are subject to margins of error (illustrated by thin line atop each column) implying caution in interpretation of the estimates and that no precise country rating is warranted See also regional clarifications in note 6

Figure 5 Transparency and GDP Growth

1

3

5

Low Middle High

Extent of Transparency

Transparent Information by GovernmentEffective Parliamentary OversightCorporate Ethics

Annual GDP Growth ()

Source Annual GDP growth over 1999-2001 is taken from WDI 2002 GDP is computed in PPP terms The various transparency governance variables drawn from Executive Opinion Survey 2002

Cor

rupt

ion

Cor

rupt

ion

High

Low

Corruption is associated with absence of Civil Liberties

Not Free Partly Free Free

Based on averages of data from 160 countries Civil Liberties

Control of Graft and Freedom of the Press

AGOALB

AREARG

ARM

AUSAUT

AZE

BEN

BFABGDBGR

BHR

BHS

BIHBLR

BOL

BRABRN

BWA

CANCHE

CHL

CHNCIV

CMR

COGCOL

CRICUB

CYP

CZE

DEU

DNK

DOMDZA ECU

EGY

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHA

GIN

GMBGNB

GRC

GTM

GUY

HKG

HND

HRVHTI

HUN

IDN

IND

IRL

IRN

IRG

ISL

ISR

ITA

JAMJOR

JPN

KAZKENKGZ

KOR

KWT

LBN

LBRLBY

LKALSO

LTU

LUX

LVA

MAR

MDA MDGMEX

MKD MLI

MLT

MMR

MNG

MOZ

MUS

MWI

MYSNAM

NER

NGA NIC

NLDNOR

NZL

OMN

PAKPAN

PER PHL

PNG

POL

PRK

PRT

PRY

QAT

ROMRUSSAU

SDN

SEN

SGP

SLESLV

SOM

SURSVK

SVN

SWE

SWZ

SYRTCD

TGO THA

TJK TKM

TTO

TUN

TUR

TWN

TZA

UGA

UKR

URY

USA

UZBVEN

VNM

YEMYUG

ZAF

ZAR

ZMBZWE

r = 068-25

-2-15

-1-05

005

115

225

0 02 04 06 08 1

High

Low

Low High

r = 68

Freedom of the Press (Freedom House)

Con

trol o

f Gra

ft [k

kz]

Overall Evidence is Sobering howeverProgress on Governance is modest at best so far

Evidence points to slow if any average progress worldwide on key dimensions of governance

This contrasts with some other development dimensions (eg quality of infrastructure quality of mathscience education effective absorption of new technologies) where progress is apparent

At the same time substantial variation cross-country even within a region Some successes

0

15

3

1984-1988 1989-1993 1994-1998 1999-2001

TRANSITION

EMERGING

OECD+NIC

Source lsquoRethinking Governancersquo based on calculations from WDI Y-axis measures the log value of the average inflation for each region across each period

Significant Decline in Inflation Rates WorldwideHighInflation

Low

(avg inlogs)

15

4

65

1997 1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

EasternEurope

East AsiaDeveloping

Latin America

Former SovietUnion

South Asia

Quality of Infrastructure(Regional Averages of HighLow Quality every year GCR 1997-2002)

Low

High

1

2

3

4

5

6

1984-1988 1989-1993 1994-1998 1999 2000 2001

Emerging amp Transition Economies

Source ICRGPRS 1984-2001 data subject to margins of error

Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG

Poor

Good

2

425

65

1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

East AsiaDeveloping

Eastern Europe

Latin America

Former SovietUnion

Extent of Independence of the Judiciary (Regional Averages of ExtentLack of Independence every year)

Non-Independent

Independent

From From lsquolsquoresearchresearchrsquorsquo to policy into policy in--country focuscountry focusA demand-driven process to improve governance build local capacity and consensus among key stakeholdersKey elements participation transparency and analytical rigor (diagnostic surveys)Outcomes greater local capacity new policy actors baseline governance data and action plan for policy reform

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 16: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000

Good Governance

-10

00

10

20

O ECD East Asia NIC Eastern Europe Middle East NAfrica

Latin America East Asiaemerging

Sub-SaharanAfrica

Former SovietUnion

South Asia

Rule of Law

Control of Corruption

Voice and Accountability

Poor Governance

Source Governance Research Indicators (KKZ) based from data in D Kaufmann and A Kraay Growth without Governance for 175 countries details at httpwwwworldbankorgwbigovernancepubsgrowthgovhtm Units in vertical axis are expressed in terms of standard deviations around zero Country and regional average estimates are subject to margins of error (illustrated by thin line atop each column) implying caution in interpretation of the estimates and that no precise country rating is warranted See also regional clarifications in note 6

Figure 5 Transparency and GDP Growth

1

3

5

Low Middle High

Extent of Transparency

Transparent Information by GovernmentEffective Parliamentary OversightCorporate Ethics

Annual GDP Growth ()

Source Annual GDP growth over 1999-2001 is taken from WDI 2002 GDP is computed in PPP terms The various transparency governance variables drawn from Executive Opinion Survey 2002

Cor

rupt

ion

Cor

rupt

ion

High

Low

Corruption is associated with absence of Civil Liberties

Not Free Partly Free Free

Based on averages of data from 160 countries Civil Liberties

Control of Graft and Freedom of the Press

AGOALB

AREARG

ARM

AUSAUT

AZE

BEN

BFABGDBGR

BHR

BHS

BIHBLR

BOL

BRABRN

BWA

CANCHE

CHL

CHNCIV

CMR

COGCOL

CRICUB

CYP

CZE

DEU

DNK

DOMDZA ECU

EGY

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHA

GIN

GMBGNB

GRC

GTM

GUY

HKG

HND

HRVHTI

HUN

IDN

IND

IRL

IRN

IRG

ISL

ISR

ITA

JAMJOR

JPN

KAZKENKGZ

KOR

KWT

LBN

LBRLBY

LKALSO

LTU

LUX

LVA

MAR

MDA MDGMEX

MKD MLI

MLT

MMR

MNG

MOZ

MUS

MWI

MYSNAM

NER

NGA NIC

NLDNOR

NZL

OMN

PAKPAN

PER PHL

PNG

POL

PRK

PRT

PRY

QAT

ROMRUSSAU

SDN

SEN

SGP

SLESLV

SOM

SURSVK

SVN

SWE

SWZ

SYRTCD

TGO THA

TJK TKM

TTO

TUN

TUR

TWN

TZA

UGA

UKR

URY

USA

UZBVEN

VNM

YEMYUG

ZAF

ZAR

ZMBZWE

r = 068-25

-2-15

-1-05

005

115

225

0 02 04 06 08 1

High

Low

Low High

r = 68

Freedom of the Press (Freedom House)

Con

trol o

f Gra

ft [k

kz]

Overall Evidence is Sobering howeverProgress on Governance is modest at best so far

Evidence points to slow if any average progress worldwide on key dimensions of governance

This contrasts with some other development dimensions (eg quality of infrastructure quality of mathscience education effective absorption of new technologies) where progress is apparent

At the same time substantial variation cross-country even within a region Some successes

0

15

3

1984-1988 1989-1993 1994-1998 1999-2001

TRANSITION

EMERGING

OECD+NIC

Source lsquoRethinking Governancersquo based on calculations from WDI Y-axis measures the log value of the average inflation for each region across each period

Significant Decline in Inflation Rates WorldwideHighInflation

Low

(avg inlogs)

15

4

65

1997 1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

EasternEurope

East AsiaDeveloping

Latin America

Former SovietUnion

South Asia

Quality of Infrastructure(Regional Averages of HighLow Quality every year GCR 1997-2002)

Low

High

1

2

3

4

5

6

1984-1988 1989-1993 1994-1998 1999 2000 2001

Emerging amp Transition Economies

Source ICRGPRS 1984-2001 data subject to margins of error

Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG

Poor

Good

2

425

65

1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

East AsiaDeveloping

Eastern Europe

Latin America

Former SovietUnion

Extent of Independence of the Judiciary (Regional Averages of ExtentLack of Independence every year)

Non-Independent

Independent

From From lsquolsquoresearchresearchrsquorsquo to policy into policy in--country focuscountry focusA demand-driven process to improve governance build local capacity and consensus among key stakeholdersKey elements participation transparency and analytical rigor (diagnostic surveys)Outcomes greater local capacity new policy actors baseline governance data and action plan for policy reform

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 17: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Figure 5 Transparency and GDP Growth

1

3

5

Low Middle High

Extent of Transparency

Transparent Information by GovernmentEffective Parliamentary OversightCorporate Ethics

Annual GDP Growth ()

Source Annual GDP growth over 1999-2001 is taken from WDI 2002 GDP is computed in PPP terms The various transparency governance variables drawn from Executive Opinion Survey 2002

Cor

rupt

ion

Cor

rupt

ion

High

Low

Corruption is associated with absence of Civil Liberties

Not Free Partly Free Free

Based on averages of data from 160 countries Civil Liberties

Control of Graft and Freedom of the Press

AGOALB

AREARG

ARM

AUSAUT

AZE

BEN

BFABGDBGR

BHR

BHS

BIHBLR

BOL

BRABRN

BWA

CANCHE

CHL

CHNCIV

CMR

COGCOL

CRICUB

CYP

CZE

DEU

DNK

DOMDZA ECU

EGY

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHA

GIN

GMBGNB

GRC

GTM

GUY

HKG

HND

HRVHTI

HUN

IDN

IND

IRL

IRN

IRG

ISL

ISR

ITA

JAMJOR

JPN

KAZKENKGZ

KOR

KWT

LBN

LBRLBY

LKALSO

LTU

LUX

LVA

MAR

MDA MDGMEX

MKD MLI

MLT

MMR

MNG

MOZ

MUS

MWI

MYSNAM

NER

NGA NIC

NLDNOR

NZL

OMN

PAKPAN

PER PHL

PNG

POL

PRK

PRT

PRY

QAT

ROMRUSSAU

SDN

SEN

SGP

SLESLV

SOM

SURSVK

SVN

SWE

SWZ

SYRTCD

TGO THA

TJK TKM

TTO

TUN

TUR

TWN

TZA

UGA

UKR

URY

USA

UZBVEN

VNM

YEMYUG

ZAF

ZAR

ZMBZWE

r = 068-25

-2-15

-1-05

005

115

225

0 02 04 06 08 1

High

Low

Low High

r = 68

Freedom of the Press (Freedom House)

Con

trol o

f Gra

ft [k

kz]

Overall Evidence is Sobering howeverProgress on Governance is modest at best so far

Evidence points to slow if any average progress worldwide on key dimensions of governance

This contrasts with some other development dimensions (eg quality of infrastructure quality of mathscience education effective absorption of new technologies) where progress is apparent

At the same time substantial variation cross-country even within a region Some successes

0

15

3

1984-1988 1989-1993 1994-1998 1999-2001

TRANSITION

EMERGING

OECD+NIC

Source lsquoRethinking Governancersquo based on calculations from WDI Y-axis measures the log value of the average inflation for each region across each period

Significant Decline in Inflation Rates WorldwideHighInflation

Low

(avg inlogs)

15

4

65

1997 1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

EasternEurope

East AsiaDeveloping

Latin America

Former SovietUnion

South Asia

Quality of Infrastructure(Regional Averages of HighLow Quality every year GCR 1997-2002)

Low

High

1

2

3

4

5

6

1984-1988 1989-1993 1994-1998 1999 2000 2001

Emerging amp Transition Economies

Source ICRGPRS 1984-2001 data subject to margins of error

Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG

Poor

Good

2

425

65

1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

East AsiaDeveloping

Eastern Europe

Latin America

Former SovietUnion

Extent of Independence of the Judiciary (Regional Averages of ExtentLack of Independence every year)

Non-Independent

Independent

From From lsquolsquoresearchresearchrsquorsquo to policy into policy in--country focuscountry focusA demand-driven process to improve governance build local capacity and consensus among key stakeholdersKey elements participation transparency and analytical rigor (diagnostic surveys)Outcomes greater local capacity new policy actors baseline governance data and action plan for policy reform

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 18: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Cor

rupt

ion

Cor

rupt

ion

High

Low

Corruption is associated with absence of Civil Liberties

Not Free Partly Free Free

Based on averages of data from 160 countries Civil Liberties

Control of Graft and Freedom of the Press

AGOALB

AREARG

ARM

AUSAUT

AZE

BEN

BFABGDBGR

BHR

BHS

BIHBLR

BOL

BRABRN

BWA

CANCHE

CHL

CHNCIV

CMR

COGCOL

CRICUB

CYP

CZE

DEU

DNK

DOMDZA ECU

EGY

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHA

GIN

GMBGNB

GRC

GTM

GUY

HKG

HND

HRVHTI

HUN

IDN

IND

IRL

IRN

IRG

ISL

ISR

ITA

JAMJOR

JPN

KAZKENKGZ

KOR

KWT

LBN

LBRLBY

LKALSO

LTU

LUX

LVA

MAR

MDA MDGMEX

MKD MLI

MLT

MMR

MNG

MOZ

MUS

MWI

MYSNAM

NER

NGA NIC

NLDNOR

NZL

OMN

PAKPAN

PER PHL

PNG

POL

PRK

PRT

PRY

QAT

ROMRUSSAU

SDN

SEN

SGP

SLESLV

SOM

SURSVK

SVN

SWE

SWZ

SYRTCD

TGO THA

TJK TKM

TTO

TUN

TUR

TWN

TZA

UGA

UKR

URY

USA

UZBVEN

VNM

YEMYUG

ZAF

ZAR

ZMBZWE

r = 068-25

-2-15

-1-05

005

115

225

0 02 04 06 08 1

High

Low

Low High

r = 68

Freedom of the Press (Freedom House)

Con

trol o

f Gra

ft [k

kz]

Overall Evidence is Sobering howeverProgress on Governance is modest at best so far

Evidence points to slow if any average progress worldwide on key dimensions of governance

This contrasts with some other development dimensions (eg quality of infrastructure quality of mathscience education effective absorption of new technologies) where progress is apparent

At the same time substantial variation cross-country even within a region Some successes

0

15

3

1984-1988 1989-1993 1994-1998 1999-2001

TRANSITION

EMERGING

OECD+NIC

Source lsquoRethinking Governancersquo based on calculations from WDI Y-axis measures the log value of the average inflation for each region across each period

Significant Decline in Inflation Rates WorldwideHighInflation

Low

(avg inlogs)

15

4

65

1997 1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

EasternEurope

East AsiaDeveloping

Latin America

Former SovietUnion

South Asia

Quality of Infrastructure(Regional Averages of HighLow Quality every year GCR 1997-2002)

Low

High

1

2

3

4

5

6

1984-1988 1989-1993 1994-1998 1999 2000 2001

Emerging amp Transition Economies

Source ICRGPRS 1984-2001 data subject to margins of error

Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG

Poor

Good

2

425

65

1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

East AsiaDeveloping

Eastern Europe

Latin America

Former SovietUnion

Extent of Independence of the Judiciary (Regional Averages of ExtentLack of Independence every year)

Non-Independent

Independent

From From lsquolsquoresearchresearchrsquorsquo to policy into policy in--country focuscountry focusA demand-driven process to improve governance build local capacity and consensus among key stakeholdersKey elements participation transparency and analytical rigor (diagnostic surveys)Outcomes greater local capacity new policy actors baseline governance data and action plan for policy reform

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 19: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Control of Graft and Freedom of the Press

AGOALB

AREARG

ARM

AUSAUT

AZE

BEN

BFABGDBGR

BHR

BHS

BIHBLR

BOL

BRABRN

BWA

CANCHE

CHL

CHNCIV

CMR

COGCOL

CRICUB

CYP

CZE

DEU

DNK

DOMDZA ECU

EGY

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHA

GIN

GMBGNB

GRC

GTM

GUY

HKG

HND

HRVHTI

HUN

IDN

IND

IRL

IRN

IRG

ISL

ISR

ITA

JAMJOR

JPN

KAZKENKGZ

KOR

KWT

LBN

LBRLBY

LKALSO

LTU

LUX

LVA

MAR

MDA MDGMEX

MKD MLI

MLT

MMR

MNG

MOZ

MUS

MWI

MYSNAM

NER

NGA NIC

NLDNOR

NZL

OMN

PAKPAN

PER PHL

PNG

POL

PRK

PRT

PRY

QAT

ROMRUSSAU

SDN

SEN

SGP

SLESLV

SOM

SURSVK

SVN

SWE

SWZ

SYRTCD

TGO THA

TJK TKM

TTO

TUN

TUR

TWN

TZA

UGA

UKR

URY

USA

UZBVEN

VNM

YEMYUG

ZAF

ZAR

ZMBZWE

r = 068-25

-2-15

-1-05

005

115

225

0 02 04 06 08 1

High

Low

Low High

r = 68

Freedom of the Press (Freedom House)

Con

trol o

f Gra

ft [k

kz]

Overall Evidence is Sobering howeverProgress on Governance is modest at best so far

Evidence points to slow if any average progress worldwide on key dimensions of governance

This contrasts with some other development dimensions (eg quality of infrastructure quality of mathscience education effective absorption of new technologies) where progress is apparent

At the same time substantial variation cross-country even within a region Some successes

0

15

3

1984-1988 1989-1993 1994-1998 1999-2001

TRANSITION

EMERGING

OECD+NIC

Source lsquoRethinking Governancersquo based on calculations from WDI Y-axis measures the log value of the average inflation for each region across each period

Significant Decline in Inflation Rates WorldwideHighInflation

Low

(avg inlogs)

15

4

65

1997 1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

EasternEurope

East AsiaDeveloping

Latin America

Former SovietUnion

South Asia

Quality of Infrastructure(Regional Averages of HighLow Quality every year GCR 1997-2002)

Low

High

1

2

3

4

5

6

1984-1988 1989-1993 1994-1998 1999 2000 2001

Emerging amp Transition Economies

Source ICRGPRS 1984-2001 data subject to margins of error

Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG

Poor

Good

2

425

65

1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

East AsiaDeveloping

Eastern Europe

Latin America

Former SovietUnion

Extent of Independence of the Judiciary (Regional Averages of ExtentLack of Independence every year)

Non-Independent

Independent

From From lsquolsquoresearchresearchrsquorsquo to policy into policy in--country focuscountry focusA demand-driven process to improve governance build local capacity and consensus among key stakeholdersKey elements participation transparency and analytical rigor (diagnostic surveys)Outcomes greater local capacity new policy actors baseline governance data and action plan for policy reform

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 20: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Overall Evidence is Sobering howeverProgress on Governance is modest at best so far

Evidence points to slow if any average progress worldwide on key dimensions of governance

This contrasts with some other development dimensions (eg quality of infrastructure quality of mathscience education effective absorption of new technologies) where progress is apparent

At the same time substantial variation cross-country even within a region Some successes

0

15

3

1984-1988 1989-1993 1994-1998 1999-2001

TRANSITION

EMERGING

OECD+NIC

Source lsquoRethinking Governancersquo based on calculations from WDI Y-axis measures the log value of the average inflation for each region across each period

Significant Decline in Inflation Rates WorldwideHighInflation

Low

(avg inlogs)

15

4

65

1997 1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

EasternEurope

East AsiaDeveloping

Latin America

Former SovietUnion

South Asia

Quality of Infrastructure(Regional Averages of HighLow Quality every year GCR 1997-2002)

Low

High

1

2

3

4

5

6

1984-1988 1989-1993 1994-1998 1999 2000 2001

Emerging amp Transition Economies

Source ICRGPRS 1984-2001 data subject to margins of error

Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG

Poor

Good

2

425

65

1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

East AsiaDeveloping

Eastern Europe

Latin America

Former SovietUnion

Extent of Independence of the Judiciary (Regional Averages of ExtentLack of Independence every year)

Non-Independent

Independent

From From lsquolsquoresearchresearchrsquorsquo to policy into policy in--country focuscountry focusA demand-driven process to improve governance build local capacity and consensus among key stakeholdersKey elements participation transparency and analytical rigor (diagnostic surveys)Outcomes greater local capacity new policy actors baseline governance data and action plan for policy reform

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 21: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

0

15

3

1984-1988 1989-1993 1994-1998 1999-2001

TRANSITION

EMERGING

OECD+NIC

Source lsquoRethinking Governancersquo based on calculations from WDI Y-axis measures the log value of the average inflation for each region across each period

Significant Decline in Inflation Rates WorldwideHighInflation

Low

(avg inlogs)

15

4

65

1997 1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

EasternEurope

East AsiaDeveloping

Latin America

Former SovietUnion

South Asia

Quality of Infrastructure(Regional Averages of HighLow Quality every year GCR 1997-2002)

Low

High

1

2

3

4

5

6

1984-1988 1989-1993 1994-1998 1999 2000 2001

Emerging amp Transition Economies

Source ICRGPRS 1984-2001 data subject to margins of error

Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG

Poor

Good

2

425

65

1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

East AsiaDeveloping

Eastern Europe

Latin America

Former SovietUnion

Extent of Independence of the Judiciary (Regional Averages of ExtentLack of Independence every year)

Non-Independent

Independent

From From lsquolsquoresearchresearchrsquorsquo to policy into policy in--country focuscountry focusA demand-driven process to improve governance build local capacity and consensus among key stakeholdersKey elements participation transparency and analytical rigor (diagnostic surveys)Outcomes greater local capacity new policy actors baseline governance data and action plan for policy reform

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 22: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

15

4

65

1997 1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

EasternEurope

East AsiaDeveloping

Latin America

Former SovietUnion

South Asia

Quality of Infrastructure(Regional Averages of HighLow Quality every year GCR 1997-2002)

Low

High

1

2

3

4

5

6

1984-1988 1989-1993 1994-1998 1999 2000 2001

Emerging amp Transition Economies

Source ICRGPRS 1984-2001 data subject to margins of error

Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG

Poor

Good

2

425

65

1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

East AsiaDeveloping

Eastern Europe

Latin America

Former SovietUnion

Extent of Independence of the Judiciary (Regional Averages of ExtentLack of Independence every year)

Non-Independent

Independent

From From lsquolsquoresearchresearchrsquorsquo to policy into policy in--country focuscountry focusA demand-driven process to improve governance build local capacity and consensus among key stakeholdersKey elements participation transparency and analytical rigor (diagnostic surveys)Outcomes greater local capacity new policy actors baseline governance data and action plan for policy reform

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 23: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

1

2

3

4

5

6

1984-1988 1989-1993 1994-1998 1999 2000 2001

Emerging amp Transition Economies

Source ICRGPRS 1984-2001 data subject to margins of error

Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG

Poor

Good

2

425

65

1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

East AsiaDeveloping

Eastern Europe

Latin America

Former SovietUnion

Extent of Independence of the Judiciary (Regional Averages of ExtentLack of Independence every year)

Non-Independent

Independent

From From lsquolsquoresearchresearchrsquorsquo to policy into policy in--country focuscountry focusA demand-driven process to improve governance build local capacity and consensus among key stakeholdersKey elements participation transparency and analytical rigor (diagnostic surveys)Outcomes greater local capacity new policy actors baseline governance data and action plan for policy reform

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 24: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

2

425

65

1998 1999 2000 2001 2002

OECD

East AsiaIndustrialized

Middle East

East AsiaDeveloping

Eastern Europe

Latin America

Former SovietUnion

Extent of Independence of the Judiciary (Regional Averages of ExtentLack of Independence every year)

Non-Independent

Independent

From From lsquolsquoresearchresearchrsquorsquo to policy into policy in--country focuscountry focusA demand-driven process to improve governance build local capacity and consensus among key stakeholdersKey elements participation transparency and analytical rigor (diagnostic surveys)Outcomes greater local capacity new policy actors baseline governance data and action plan for policy reform

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 25: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

From From lsquolsquoresearchresearchrsquorsquo to policy into policy in--country focuscountry focusA demand-driven process to improve governance build local capacity and consensus among key stakeholdersKey elements participation transparency and analytical rigor (diagnostic surveys)Outcomes greater local capacity new policy actors baseline governance data and action plan for policy reform

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 26: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

InIn--country focus to policy makingcountry focus to policy makinghelliphellip

Commitment of the governmentCreation of national steering committeeImplementation of diagnostic surveysPublic discussion and dissemination of resultsParticipatory development of country strategyFollow-up monitoring activities

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 27: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Who Should take the lead in a National GovernanceAnticorruption Program

3

4

4

4

7

8

18

4

48

0 10 20 30 40 50

Not Worth It

NGOs Alone

Intl Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 28: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

The processChallenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Experientialdata from 3sources on quality of

governance

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 29: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Key Features of Governance Diagnostic ToolsMulti-pronged surveys of households firms and public officials [lsquotriangulationrsquo]

Experiencial questions (vs lsquoopinionsrsquogeneric) Specially designed and tested closed questionsConceptual framework Incentive Structure

behind Governance focus on development Rigorous technical requirements in

implementationLocal Institution Implements with WB

CollaborationRecognizing Multidimensionality of Governance

Focus on Service Delivery Input for Action and Change

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 30: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Challenge poor governance and corruption

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

A few Illustrations

GuatemalaHighly fragmented civil societyJoint effort (CMU SDV WBI) to build consensus

Sierra LeoneStrong commitment (civil society state donors) =gt surveys and report within a year Results will be used for Institutional Reform Project

HondurasCNA report and strategy to newly elected gov (January 2001) integration of strategy in the 2002-2006 government plan

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 31: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Additional success storiesGhana report and strategy (2000) integration of results into Bank projects dissemination at national and regional levelColombia report (2001) Strategy in progress collaboration between government and steering committeeBolivia report (2001) country reform policy for Judiciary and procurement

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 32: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Stages for Development of the National Anti-Corruption Strategy

1 Establishment of Steering Committee

2 Diagnostic surveys + analysis

3 Draft of the NAS

4 Public dissemination + discussion

5 Revision of the NAS

6 Implementation by Government

7 Monitoring and Evaluation of NAS

WB

I Tec

hnic

al A

ssis

tanc

e

Key Partnership Government + Civil Society

Country Implemented

Alternative pathsPeru

Lack of political will =gt strategy never implementedSubsequent entry point capacity building for monitoring with CMU and SDV

IndonesiaWeak demand for reform and damaged reputation =gt work with local partners + donors support A-C diagnostics by local NGO involvement of locals in design and implementation of projects

San PauloDifferent unit of observation city Partnership with TI to adapt tools and compile report

EcuadorLack of political will (2000) =gt report never releasedNew government (2003) =gt A-C and governance key issues in the new CAS

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 33: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

The power of diagnostic data and key dimensions for analysis

1 Unbundle corruption by type ndashadministrative capture of the state bidding theft of goods and public resources purchase of licenses and regulations

2 Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 34: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Key dimensionshellip Cont

3 Assess the cost of each type of corruption on different groups of stakeholders

4 Identify key determinants of good governance

5 Develop policy recommendations

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 35: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

A few illustrations from country diagnostic surveys around the worldExtent of mis-governance Type of mis-governanceQuality of servicesLink with service provisionLink with institutional determinants

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 36: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Extent of corruption

0 20 40 60 80

of public officials report frequent publicfunds mis-management

of public officials report frequentpurchase of positions in their institutions

public officials report frequent cases ofcorruption in public administration

firms report bribes used frequently inpublic services

users report bribes used frequently inpublic services

firms report bribes used frequently inpublic contracts

Peru Colombia Honduras Ecuador

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 37: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Accessibility of Public Services to the Poor(as reported by public officials various counties 1999-2001)

40

60

80

100

Cambod

iaPara

guay

Bolivia

Roman

iaColo

mbia

PeruHon

duras

pub

lic o

ffici

als r

epor

ting

the

serv

ice

prov

ided

by

thei

r in

stitu

tion

is ac

cess

ible

to p

oor

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 38: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Vulnerabilities of Corruption Reporting Complaint Mechanisms

(as reported by public officials various countries 1999-2001)

0

20

40

60

80

100

Bolivia Paraguay Peru Colombia Honduras

r

epor

ting

com

plai

nt m

echa

nism

is

Complicated Unsafe Politicized Threatening elite

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 39: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin American country 2001)

0

5

10

15

20

25

30

35

Irregula use ofpublic

resources

Bribes to obtainpublic contracts

Bribes tochange a legal

decision

Bribes to obtaina public service

re

port

ing

that

this

form

of c

orru

ptio

n i

very

freq

uent

Municipal agencies National agencies

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 40: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

7

303035352027

19232936162114203143

632622

4242

0

10

20

30

40

50

60

70

80

90

100

Georg

iaCam

bodia

Hondur

as

Roman

ia

Parag

uay

Latvia

Bolivia

Slova

kia

Ecuad

or

Peru

Columbia

Rank of Parliament within country by Public Servants

Source WBI diagnostics and survey data various countries 1992-2001 httpwwwworldbankorgwbigovernanceNote The chart shows percentage of respondents reporting that Parliament is dishonest institution The number at the topof each bar reflects the ranking of Parliament relative to other government institutions

Parliaments Misgoverned or Honest Institutions

Relatively good Relatively bad

w

ho believe that Parliament is corrupt

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 41: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Alternative Dispute Resolution Mechanisms(as reported by users 1999-2001)

05

101520253035404550

Lawyer Higherrankingofficial

Third party NGO Person inthe Police

Threatsforce

Directnegotiation

Other

o

f use

rs th

at u

sed

such

al

tern

ativ

e m

echa

nism

Peru Honduras Colombia

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 42: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Personnel and budget decisions in public institutions (as reported by public officials 2001)

0

10

20

30

40

50

Politicizedpersonnel decisions

Personnel decisionsbased on private

connections

Politicized budgetdecisions

Budget decisionsbased on private

connections

r

epor

ting

Colombia Honduras Peru

Personnel Budget

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 43: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Corruption penalizes especially lower income usersCorruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public services)

0

2

4

6

8

10

12

14

Ecuador Peru Honduras

Low incomeMedium incomeHigh income

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 44: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Public Sector Characteristics and Public Sector Characteristics and GovernanceGovernance

Internal TransparencyMeritocracySocial Involvement and collective actionQuality of norms and rulesldquoAccountabilityrdquo amp citizen voiceRule application and supervisionSalary SatisfactionAgency MissionsPoliticizingQuality of services

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 45: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Citizen Voice and Access to Public Services by the Citizen Voice and Access to Public Services by the Poor Poor (Bolivia illustration each observation is a public agency)(Bolivia illustration each observation is a public agency)

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90

Voice External Accountability

Acc

essib

ility

to th

e Po

or

ControlledCausalLink

r = 054

Based on Public Officials Survey The sample of institutions includes 44 national departmental and municipal agencies which are a prior anticipated to be accessible to the poor

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 46: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Citizen Voice Helps Control Bribery in Citizen Voice Helps Control Bribery in LAC countryLAC country

10

20

30

40

50

Low Moderate_Low Moderate_High High

Voice External Accountability

Brib

ery

Simple Average Association Control Causal Link Margin of ErrorBased on 90 national departmental and municipal agencies covered in the Bolivia Public Officials Survey

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 47: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Transparency within Government Agencies Prevents Purchase of Public Positions

3

6

9

12

15

18

Low Moderately Low Moderately High High

Internal Transparency

Job

Purc

hase

Simple Average Association Control Causal Link Margin of Error

Based on 90 national departmental and municipal agencies covered in the Public Officials Survey

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 48: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Determinants of Governance(based on public official responses Bolivia 2001)

Governance Determinant of

Performance

Simple Unconditional Relationship

ConditionalCausal Relationship

lsquoEthical Valuesrsquo 0 0 Agency Autonomy 0 Enforcement of Rules 0 Quality of Rules 0 Wage Satisfaction 0 Politicization Internal Transparency External Voice Corruption

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 49: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

To sum a few salient lessonsGovernance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C StrategyTransparency and public dissemination of the results are keyThe approach must be participatory at each stage of the process

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 50: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

A Few Salient Lessons contTo unbundle corruption and institutional weaknesses allows to identify key areas for reformQuality control and use of rigorous analytical methods enhance the credibility of the results

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 51: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

State Capture

Efforts of firms to shape the legal policy and regulatory environment through illicit non-transparent provision of private gains to public officials

Examples includeprivate purchase of legislative votesprivate purchase of executive decreesprivate purchase of court decisionsillicit political party financing

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 52: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Inequality of WealthIncome

Inequality of Influence

Subversion of Institutions

Insecurity of Property Rights

Reduced Growth

Towards an Understanding of the Institution of Influence

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 53: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Recent Findings

Firms who perceive a greater inequality of influence in their country ( where political system biased towards political cronies) exhibit

bull Negative assessment of Court system -- in terms of its fairness impartiality amp enforcement of decisions

bull Less use of courts to resolve business disputesbull Less secure property and contract rightsbull Pay more bribes and bull Less tax compliance more unofficial activities-- Thus less credibility of formal institutions which in

turn are undermined by behavior of economic agentsbull Inequality of influence is related to the extent of

political liberalization -- in a non-linear fashion

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 54: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries

0

35

70

LatinAmerica

FormerSovietUnion

EasternEurope

Sub-saharanAfrica

Middle East East Asiadeveloping

South Asia OECD East AsiaIndustrial

of firms rating type of corruption as highvery high

Access Public UtilitiesProcurementCapture of Laws amp Regulations

Extent of Bribery for

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 55: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2001)

0 20 40 60 80 100

Bribes to officials ofCentral Bank

To Judiciary

To regulatory agencies

To officials influencingministerialpresidential

To Municipalauthoritiescouncils

To Parliamentarians toinfluence laws

of public officials reporting

Colombia Honduras Peru

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 56: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Political contributions(as reported by enterprises 2001)

01020304050607080

Political contributions arefrequent

Private firms benefit frompolitical contributions they

made

Our firm has seen the needto contribute

o

f fir

ms

res

pons

es

Colombia Honduras Peru

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 57: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter

0

01

02

03

04

Sta

te C

aptu

re I

nd

ex

Partial Civil Libs High Civil Libs

Advanced

Partial

Slow

Pace of Econ Reform

PoliticalCivil Liberties Reforms

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 58: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

0

25

50

75

100

OECD Sub SaharanAfrica

South Asia Latin America Former SovietUnion

Illegal Political Financing

Favoritism in ProcurementAwardIneffective Parliament

of firms that report

Pervasive

Not a Constraint

Extent of

More broadly Politics Matters ndashand it can be measured (GCR 2002)

Selected Regions based on EOSurvey of 5000 firms in 80 countries WEF-GCR

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 59: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Crony bias vs Democratic Voice amp Accountability(from Executive Survey for the Global Competitiveness Report 20023 for 80 countries)

Crony Bias vs Democratic Voice and Accountability

00

05

10

-20 00 20Democratic Voice and Accountability

Cron

y Bi

as

r = - 041

Low

High

Lo

High

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage
Page 60: Corruption, Transparency and Governance - World Banksiteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479... · Corruption, Transparency and Governance ... the thin lines

Some Implications for the next stage

(1) A Broader Governance Framework(2) The Power of Data and Country-Diagnostics(3) Localize Know-how Diagnose amp Differentiate(4) Unbundling Politics Influence Capture Party

Finance(5) External Accountability Voice Transparency

amp systemic incentives (with new egovernance toolsdata)

  • Corruption Transparency and Governance Workshop on Deliberative Democracy
  • Objective
  • Main Results
  • Outline
  • What is Governance A working definition for public governance
  • Governancehellip
  • Each of the 3 main components of governance can be unbundled into 2 subcomponents
  • Building Aggregate Governance Indicators
  • Inputs for Governance Indicators 2002
  • Rule of Law 1998 vs 2000 ndash Latin America
  • lsquoTraffic Lightrsquo World MapVoice and Accountability ndash 2000
  • Governance and Poverty Nexus I
  • Governance and Poverty cont
  • The lsquoDividendrsquo of Good Governance
  • Figure 1 Rule of Law Voice and Accountability and Control of Corruption Regional Averages KKZ 2000
  • Overall Evidence is Sobering however Progress on Governance is modest at best so far
  • Significant Decline in Inflation Rates Worldwide
  • Control of Corruption Over Time for EmergingTransition Economies ndash PRSICRG
  • From lsquoresearchrsquo to policy in-country focus
  • In-country focus to policy makinghellip
  • Key Features of Governance Diagnostic Tools
  • Additional success stories
  • The power of diagnostic data and key dimensions for analysis
  • Key dimensionshellip Cont
  • A few illustrations from country diagnostic surveys around the world
  • Extent of corruption
  • National and municipal agencies are ridden by different types of corruption(based on public officials responses a Latin Ame
  • Personnel and budget decisions in public institutions (as reported by public officials 2001)
  • Corruption penalizes especially lower income users( of income paid in bribes as reported by all users that requested public
  • Public Sector Characteristics and Governance
  • Citizen Voice and Access to Public Services by the Poor (Bolivia illustration each observation is a public agency)
  • Citizen Voice Helps Control Bribery in LAC country
  • Transparency within Government Agencies Prevents Purchase of Public Positions
  • Determinants of Governance
  • To sum a few salient lessons
  • A Few Salient Lessons cont
  • State Capture
  • Unbundling Corruption ndash [Regional Averages]Preliminary results 2002 View of the Firm 80 countries
  • Extent of State Capture Undue Influence by the Elite to Influence Laws and Regulations (as reported by public officials 2
  • Political contributions (as reported by enterprises 2001)
  • Addressing Capture Economic Reform Political Competition amp VoiceCivil Liberties Matter
  • Some Implications for the next stage