Post on 11-Jun-2018
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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 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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)