Alla ricerca della legalità perduta. Gioca il tuo ruolo! Economic and Social Costs of Corruption...

Alla ricerca della legalità perduta. Gioca il tuo ruolo!

Economic and Social Costs of CorruptionCristina Brasili

Fundacion para el Desarrollo de la Libertad CiudadanaCapitulo Panameno de Trasparencia Internacional (TI)

Economic and Social Costs of CorruptionOutline

1. The figure of corruption in Italy and in Panama2. Correlations among economic variables and

corruption3. Awareness and knowledge of the corruption

phenomenon in Italy4. Alla ricerca della legalità perduta. Gioca il tuo ruolo (Corruttopoly)5. Some concluding remarks

Economic and Social Costs of Corruption by Cristina Brasili – PANAMA, August 2015


1. The figures of corruption

On February 3rd, 2014, the first EU Anti-Corruption Report published by the European Commission stated that:

1) The total direct costs of corruption in Italy amount to € 60 billion each year (equivalent to approximately 4% of national GDP)2) The overall estimate for the European Union is about € 120 billion

Is half of total EU corruption produced in Italy?



Are these findings based on facts or are they only perceptions-driven?

The objective dataThe € 60 billion figure was created from very gross estimate but was then

established by a «word of mouth».

In 2004 some rough estimations found that a 3-4% loss in the world GDP was directly attributable to corruption. Someone then applied that percentage to Italy’s GDP and returned the figure of € 60 billion who received considerable attention by politicians, economists and media in general.

This anecdote proves how difficult it is to get reliable information and measurements on such an illegal and hidden phenomenon.



1. The objective data

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

1714

12621331

809

1279

540466

654

434 454

239341

295354

263

Corruption sentences in Italy: 1996-2010

Fonte: La corruzione in Italia: cause, dimensioni, effetti, di Alberto Vannucci, in La legge anticorruzione. Prevenzione e repressione della corruzione, B.G. Mattarella e M. Pellissero (a cura di), Giappichelli Editore, Torino, 2013.



Business Cycle Indicator and corruption events in Italy. March 2003 - June 2014

Fonte: RegiosS Cycles & Trends and various web sites. The events reported in the graph refer to major grand corruption scandals.

1. Objective data



1. Objective Data



Source: http://www.businesspanama.com/about_panama/fundamentals/growth_sectors.php

http://www.businesspanama.com/about_panama/fundamentals/growth_sectors.php


http://www.businesspanama.com/about_panama/images/grow_1.jpg

1. Objective Data



Panama - GINI indexGINI index (World Bank estimate)The value for GINI index (World Bank estimate) in Panama was 51.90 as of 2012. Over the past 23 years this indicator reached a maximum value of 58.91 in 1989 and a minimum value of 51.83 in 2011.Italy - GINI indexGINI index (World Bank estimate)The value for GINI index (World Bank estimate) in Italy was 35.52 as of 2010. Over the past 24 years this indicator reached a maximum value of 37.60 in 1998 and a minimum value of 31.47 in 1991.

Definition: Gini index measures the extent to which the distribution of income (or, in some cases, consumption expenditure) among individuals or households within an economy deviates from a perfectly equal distribution. A Lorenz curve plots the cumulative percentages of total income received against the cumulative number of recipients, starting with the poorest individual or household. The Gini index measures the area between the Lorenz curve and a hypothetical line of absolute equality, expressed as a percentage of the maximum area under the line. Thus a Gini index of 0 represents perfect equality, while an index of 100 implies perfect inequality.Source: World Bank, Development Research Group. Data are based on primary household survey data obtained from government statistical agencies and World Bank country departments. http://iresearch.worldbank.org/PovcalNet/index.htm).

International Ranking CPI 2014 Transparency International


Country CPI 2014 RankDenmark 92 1

New Zealand 91 2

Finland 89 3

Sweden 87 4

Norway 86 5

. . .

Kuwait 44 67

South Africa 44 69

Brazil 43 69

Bulgaria 43 69

Greece 43 69

Italy 43 69

Romania 43 69

Senegal 43 69

. . .Liberia 37 94

Panama 37 94

Algeria 36 100

China 36 100

. . .Sudan 11 173

Korea (North) 8 174

Somalia 8 174

The Corruption Perceptions Index ranks countries/territories based on how corrupt a country’s public sector is perceived to be. It is a composite index, drawing on corruption-related data from expert and business surveys carried out by a variety of independent and reputable institutions.

Perception Data on Corruption

http://www.transparency.org/research/cpi



PANAMA

FACTS & FIGURES* Population (2010):

3.5 million* GDP (2010):

$26.69 billion* Infant mortality rate (per 1,000 live births - 2010):

17.2* Life expectancy (2009)

75.8 years* Literacy rate (2009)

93.6%(* World Bank data)

ITALYFACTS & FIGURES* Population (2010):

60.5 million* GDP (2010):

$2.05 trillion* Infant mortality rate (per 1,000 live births - 2010):

3.1* Life expectancy (2009)

81.44 years* Literacy rate (2009)

98.9%

(* World Bank data))

Source: http://www.transparency.org/country



PANAMA FACTS & FIGURES

The Human Development Index measures the average achievements in a country on three basic dimensions: a long and healthy life, access to knowledge and a decent standard of living.The index was created to emphasize that people and their capabilities should be the ultimate criteria for assessing the development of a country, not economic growth alone.The index is classified into four quartiles:• Very high• High• Medium• Low

Rank 58/187Score: 0.678

High


http://hdr.undp.org/en/statistics/



PANAMA FACTS & FIGURES

Voice and Accountability captures perceptions of the extent to which a country's citizens are able to participate in selecting their government, as well as freedom of expression, freedom of association, and a free media.

Control of corruption is one of the six dimensions of the Worldwide Governance Indicators.

Point estimates range from about -2.5 to 2.5. Higher values correspond to better governance outcomes.

Percentile Rank: 62%Score: 0.4796


http://info.worldbank.org/governance/wgi/sc_country.asp



The data on quality of institutions (1)To analyse the quality of the government we chose the concept of “good governance”, given in the Nineties, by the most important international organizations conceptualisation (World Bank, UN, IMF). The European Commission, also, in the Fifth Report on the social and territorial cohesion (2010) shows the centrality relevance the quality of institutions saying: “The economists are ever more sure the quality of the institutions would be important effects on the economic growth and development. Poor institutions can, in particular, hinder the effectiveness of regional development strategies” (EU, 2010, p. 65). Several social scientists, from geographers (Amin and Thrift, 19949) and political scientists (Putnam, 1993, 2000), up to economists (North, 1990; Acemoglu et al., 2001), have underlined how the quality of the institutions determines the long-term economic growth more than others economic factors (Rodrick et al, 2004) and affects the effectiveness and returns of public policies (Rodríguez-Pose e Garcilazo, 2012).Douglass North in his contribute “Institutions, Institutional Change and Economic Performance” (1990) gives to the institutions a central role in the development, together with the constraints derived from those and with political and economical organizations working in the frame determined by the same institutions. North defines institutions as the basic rules of the road in an economy. This includes formal systems, such as constitutions, laws, taxation, insurance, and market regulations, as well as informal norms of behavior, such as habits, customs, and ideologies. Starting from this definition, we have to adopt a “measure” of the quality of the institutions.



The data on quality of institutions (2)The quality of the institutions has been measured throughout a lot of indicators, all of them subjected to some warnings because they are only based on perceptions.The World Governance Indicators (WGI) given by the World Bank, identify six dimensions of the governance, each measured by an index: Voice and Accountability, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law, Control of Corruption. The values of the six indicators show how EU countries have a good quality of governance in average respect to the other countries. Northern European countries have the best governance level. The scholars of Quality of Government Institute (QoG Institute) of Gothemburg considered four of the six WB indicators, defining fairness, efficiency, transparency, lack of corruption. With these elements they gave a measure of the quality of institutions in EU regions.The regional level of the indicator on the quality of institutions has been captured by the interviews in the EU regions to study fairness, efficiency, transparency and lack of corruption in three public services which jurisdiction is, generally, at regional level: education, health and rule of law.

European Quality of Government Index, 2009

Source: Charron, Lapuente, Dijkstra (2012)



2. Correlations among economic variables and corruption

European Quality of Government Index, 2009

Source: elaboration on data of Quality of Government Institute

Bolzano

Campania





It is very difficult to quantify corruption

It is less difficult to identify the correlation

between corruption and economic and social variables



Corruption and investments

Source: elaboration on World Bank and Penn World Table (University of Pennsylvania). Year 2008, 182 countries


Corruption and business environment

Source: elaboration on World Bank and WGI. Year 2011


Corruption and public health expenditure

Source: elaboration on WGI and WDI data, 187 countries


Corruption and education

Source: elaboration on WGI and UNESCO data. Year 2011, 187 countries


Corruption and Gender Inequality Index

Source: elaboration on WGI and UNDP, Human Development Report, 148 countries


Corruption and social mobility

Source: Corak (2012), World Development Indicators e Worldwide Governance Indicators, World Bank.


3. Awareness and knowledge of the corruption phenomenon in Italy: the contradiction in the data

The Special Eurobarometer (2013) on Corruption showed that: 97% of Italian respondents (second highest percentage in the

EU) believe that corruption is widespread in their country (EU average: 76%)

42% say that they are personally affected by corruption in their daily life (EU average: 26%). Only Greece shows a higher value, 99%



THE CONTRADICTION74% of Italian respondents think that in the last three years

corruption has increased BUT about direct experience with bribery, Italy scores better than the EU average in the 2013 (Special

Eurobarometer on Corruption), with only 2% saying that they were asked to pay a bribe in the previous year

(EU average: 4%).

Then, is corruption actually decreasing?

Economics and Social Costs of Corruption by Cristina Brasili – PANAMA, August 2015


3. Awareness and knowledge of the corruption phenomenon in Italy

Opinions regarding “How it would be acceptable to behave for obtaining something from a member of a public administration?”



To give money To give a gift To make a favour

3. Awareness and knowledge of the corruption phenomenon in Italy

This is the big contradiction emerging from Eurobarometer data: the corruption is widespread in Italy but is very far from each citizen

and what we have to do?

“Alla ricerca della legalità perduta. Gioca il tuo ruolo”(Corruttopoly) project born in 2012 thanks to a group of Professors and Phd students of the University of Bologna under the initiative “I ricercatori parlano alla città” (The scholars talk to the city”).The project transformed the research on corruption in a role-play game targeted to the high level students of some Bolognaise schools.



4. Alla ricerca della legalità perduta. Gioca il tuo ruolo Corruttopoly



Charcteristics of the game

Alla ricerca della legalità perduta. Gioca il tuo ruolo is a role-play game set in a fictional city, Corruttopoly, where

a corrupted and informed minority faced an honest and uninformed majority.

The objective of the honest group is uncover the corrupted citizens and eliminate them from the game. Viceversa the objective of the corrupted citizens is to eliminate the honest from the game.



4. Alla ricerca della legalità perduta. Gioca il tuo ruolo Looking for the lost legality. Let’s play your game

The objective of the gameTo promote the culture of legality and the civil conscience and the responsible citizenship throughout:

The awareness of the social and economics costs of corruption and illegality. The importance of a wealthy social and economic environment based on public ethic and respect of the law;

The knowledge of the most important economic and law tools to fight corruption;

The awareness about the relevance of an active and participative citizenship.



Why a game?

The players act the part of key-figures of crime (briber, intermediary..) or of legality (judge, journalist..).Thus, they can understand the dynamics of how arises and spreads illegality. Furthermore they experience the most important tools to prevent and fight corruption.



(Graphic by Fabio Sera)



Cards contain an explanation of the role and its special power

Key Elements (1)The stories

Why a truck driver of Corruttopoly has lost the sight and cannot drive anymore?Why a brilliant student cannot afford the academic career?Why the mini-volley team cannot participate to the championship league?

The stories told during the game are inspired by really happened corruption cases. Thus the players can understand the capillarity and the devastating impact of corruption on the society: from sophisticated economic business up to the deprivation of fundamental rights.



Key Elements (2)The Game Board

The graphic of the game board includes the shape of the City and the images of the cards. Moreover it shows the “Law Thermometer” which represents the levels of the legality of Corruttopoly in the different phases of the game and it has the same scale of the Corruption Perception Index of Transparency International.

The variations of the thermometer can determine anti-corruption measures (for example Special Anti-Corruption Plan, Test of integrity) or pro-corruption measures (e.g. law against the freedom of the press) which influence the special powers of the players and foster a side or another.



Key elements (3)The Assembly

Every day, players participate to the Assembly of Corruttopoly in which everyone can speak and make hypothesis about the identities of suspects.

It is important to improve an active citizenship to prevent and to fight the widespread of corruption.



4. Some concluding remarks (1)The contradiction

Corruption is perceived very widespread in Italy but, at the same time, very far from each citizen.

Corruption is a cancer involving all the institutions of the country but it is perceived as the life of the single citizen.



Some concluding remarks (2)What we have to do?

To have a quantitative measure of the phenomenon is necessary…

On the one hand empowering reliable data starting from judicial statistics, implement victimization survey, sample survey on the public procurement, give more power to the Court of Audit to control the people involved in public expenditure.



4. Some concluding remarks (3)What we have to do?

“Legality Literacy”….…on the other hand increasing the knowledge on corruption: to understand what it is, how it appears in the everyday life and which severe spillover and consequences have for everyone. It’s important to start from the younger people and using in every occasion the concept of “legality” as fundamental value.



References Alla ricerca della legalità perduta. Gioca il tuo ruolo! A cura di Cristina Brasili. Introduzione

di Piercamillo Davigo. Ed. Socialmente Aiello V., Brasili C., Reverberi P.M., "Gli italiani e la corruzione: io non c'entro", Lavoce.info,

11 marzo 2014 Arnone M., Davigo P., "Arriva la crisi economica? Subito spunta la corruzione", Vita e

pensiero, (5), 2005 Commissione europea, "Relazione dell'Unione europea sulla lotta alla corruzione", 3

Febbraio 2014 Eurobarometer, Special Eurobarometer 397 "Corruption", 2014 Davigo P., Mannozzi G., "La corruzione in Italia. Percezione sociale e controllo penale”,

Laterza, Roma, 2007 Del Monte A., "Quanto pesa la corruzione sul debito pubblico?", Lavoce.info, 7 ottobre 2014 Mauro P., "Corruption and growth", Quarterly Journal of Economics, 110(3), 1995 Mauro P., "The Effects of corruption on growth, investment, and government expenditure",

IMF Working Paper WP/96/98, 1996 Polo M., Vannucci A., "I gattopardi delle mazzette", lavoce.info, 20 maggio 2014 http://www.businesspanama.com/about_panama/fundamentals/growth_sectors.php http://www.transparency.org/country

www.allaricercadellalegalitaperduta.itProject edited by Brasili C., Aiello V., Fanti J., Reverberi P.M.



http://www.allaricercadellalegalitaperduta.it/

Thanks a lot to the coauthors of the project Alla ricerca della legalità perduta. Gioca il tuo ruolo Valentina Aiello, Jacopo Fanti, Pierre Maurice Reverberi

Thanks for your attention!



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