Diagnostic Tools and Empirical Analysis of Governance as an Input in the Fight against Corruption.
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1 Diagnostic Tools and Empirical Analysis of Governance as an Input in the Fight against Corruption. Anti-corruption Workshop Francesca Recanatini World Bank Institute August 13 th, 2001
2 Box 1. A Multi-pronged Strategy for Addressing State Capture and Administrative Corruption Institutional Restraints: Independent and effective judiciary Legislative oversight Independent prosecution, enforcement Political Accountability: Political competition, credible political parties Transparency in party financing Disclosure of parliamentary votes Asset declaration, conflict of interest rules Civil Society Participation: Freedom of information Public hearings of draft laws Role for media/ngos Anticorruption Competitive Private Sector: Economic policy reform Competitive restructuring of monopolies Regulatory simplification for entry Transparency in corporate governance Collective business associations Public Sector Management: Meritocratic civil service with monetized, adequate pay Budget management (coverage, treasury, procurement, audit) Tax and customs administration Sectoral service delivery (health, education, energy) Decentralization with accountability Source: World Bank, 2000, Anticorruption in Transition A Contribution to the Policy Debate.
3 Motivation Will and Political Leadership for Institutional Reforms and/or Collective Action Strategy and Action Plan Governance Evaluation - Identification of severe obstacles - Vulnerability of each institution - Identification of priorities Empirical Data and Diagnostics
4 Diagnostic Tools Key Questions Why is it necessary to measure governance and corruption? Which empirical tools we can use? What kind of surveys and diagnostics? Which methodological requirements? How can we use this empirical information?
5 Why is it Necessary to Measure Corruption and Governance? - The cost of corruption and bad government is too big for development [poverty, income, investment] - If it can t be measured, it can t be controlled - Objective information might help de-politicized the debate over the reforms - The data helps facilitate the identification of (i) priorities for institutional reform and (ii) potential causes of mis-governance
6 Governance Matters for Development Government effectiveness lowers infant mortality Lower regulatory burden improves welfare High 10 Log infant mortality SLE MLI SOM AGO MWI GNB LBR MOZ NER TCD ZMB ETH BFA GIN CAF IRG ZAR MDG UGA COG BEN MMR CIV HTI GAB PAKYEMTZA LSO TGO SDN NGA ZWE KEN BGD GHA SENGMB SWZ BOL NAM PNG IND BWA CMR PRK GUY IDN EGYZAF MNG MAR NIC GTM TKM DOM HND TUR PER BRA SYR DZA ALB KGZ ECU VNM CHNPHL TJK SLV THA MEX IRN JOR LBY UZB SUR KAZ COL LBN TUN PRY OMN AZE BGR RUS ROM SAU PAN WTB VEN MDA MUS ARG FJI YUG ARM GEO BHS LKA LVA URY BIH UKR MKD BLR JAM QAT TTO CRI KWTLTUEST MYS CHL PRI BRN HUN POL SVKARE BHRKOR HRV CYP CUB GRC MLT CZE ISR PRT TWN USA CAN ITA! AUTIRLAUS ISL NZL ESP LUX SVN JPN HKG FRADEU NOR DNK SWE FIN GBR NLD CHE SGP Iincome per capita Low High Regulations Low Regulations Government effectiveness Regulatory burden High % 100 Adult literacy Low % Controlling graft helps literacy High -2.5 Corruption Low Corruption 2.5 Graft and corruption Log infant mortality Better rule of law improves infant mortality High Low R 2 = Low High 2.5 Rule of Law
7 Impact of good governance on investments and development Investment as % of GDP Index of growth per capita 20% 2% 1.5% 1% 15% 0.5% 0% -0.5% 10% High Medium Low -1.0% -1.5% Government Quality High Medium Low
8 Corruption as a Regressive Tax for Enterprises and Households. 6% Bribes as %of monthly revenue 5.5% 6% Bribes as % of total income 4% Enterprises 4% 4.2% Households 3.1% 2% 1.5% 2% 2.1% 1.4% 0% Micro Small/Medium Big 0% Low Medium High Enterprise Size Household Income
9 Which Empirical Tools? What Kind of Surveys? Depends on Analysis Objectives Key => Evaluate limitations/costs & advantage/benefits of each recompilation tool of data to select the appropriate methodology Evaluate tools: complementary vs. substitutes Table 1
10 Types of Surveys Concep-tual Frame/ quality of goverment indicators Comparability Objective Approach Measuring Precision Periodic Monitoring within the country Quality of detailed information via agency or specific subject Increasing governance analysis Ability to determine general challenges Use by different Institutions within the country Importance to prioritize reforms Cost Effectiveness Effectiveness for Judicial actions Comparative Indexes of International Corruption Opinion Survey Enterprise Staff Survey Detail Diagnosis of Governance "Report Cards" Quick Monitoring Surveys Quality Profound Interviews Oficial Data statistics Monitoring Budget Use Precios testigos Judicial Investigations Video Techniques / "Sting" MEDIUM /LOW HIGH LOW LOW MEDIUM NONE NONE LOW NONE NONE LOW NONE MEDIUM LOW LOW LOW MEDIUM LOW LOW LOW LOW LOW LOW NONE MEDIUM /HIGH MEDIUM MEDIUM MEDIUM MEDIUM/ HIGH MEDIUM MEDIUM MEDIUM HIGH MEDIUM MEDIUM MEDIUM MEDIUM/ MEDIUM/ HIGH HIGH HIGH HIGH HIGH MEDIUM MEDIUM MEDIUM HIGH LOW MEDIUM HIGH MEDIUM /HIGH HIGH LOW LOW MEDIUM/ LOW HIGH MEDIUM NONE LOW HIGH MEDIUM LOW MEDIUM LOW LOW LOW LOW NONE LOW NONE HIGH MEDIUM MEDIUM MEDIUM/ LOW LOW HIGH HIGH HIGH LOW MEDIUM LOW LOW LOW MEDIUM MEDIUM MEDIUM MEDIUM/ LOW NONE LOW HIGH NONE MEDIUM MEDIUM/ NONE HIGH LOW LOW LOW/ NONE LOW LOW/ NONE MEDIUM HIGH HIGH MEDIUM NONE LOW/ NONE LOW/ NONE LOW NONE NONE MEDIUM/ NONE LOW HIGH NONE NONE LOW HIGH NONE NONE MEDIUM HIGH NONE NONE NONE HIGH NONE NONE LOW HIGH LOW LOW MEDIUM LOW NONE NONE
11 Principal Characteristics of the New Diagnostic Tools Three Parallel Surveys: i) citizens, ii) enterprises & iii) (new) public auctioneers [ triangulation ]. Experienced Questions (vs. opinions /general/common) Specially formulated with precise questions Conceptual Frame: Governance & Institutional weaknesses & systematic Beyond Corruption Rigorous technical requirements for implementation and analysis: how to work with the institutions on implementation, etc. The country leads the process, implements diagnostics/surveys
12 How can we use empirical information? 1. To compare the experience and quality of governance in different countries 2. To evaluate the depth of governance in a country 3. To identify the principal causes and to prioritize the reforms 4. To monitor the progress of the reform Some Examples
13 3 2 Reliability of the corruption index data Measurement & Addition in 155 countries OTHERS IDA IBRD/IDA IBRD OECD Corruption Level Margin of Error -3
14 Bribes in the implementation of the regulatory frame (according to employers, South American country) To Obtain contracts with government agencies To facilitate the judicial process To process licenses and permits Foreign Domestic
15 Purchase of positions in the public sector Customs Taxes Natural Resources Judges Police Investigators/ Procecutors Albania Georgia Latvia Local officials Ministers Percentage of public officials believed to have purchased their positions Based on 1998 World Bank surveys of public officials in these countries: 218 public officials in Latvia (with Latvia Facts); 350 public officials in Georgia (with GORBI); and 97 public officials in Albania (with ACER).
16 A Diagnosis based on a Public Officials Survey done in Ecuador illustrates how Meritocracy reduces Corruption High Level of Corruption Low Prov. Council Electoral Supreme Tribunal Undersec. Of Gov't Congress Real Estate Bank Comptroller Undersec. Of Social Welfare National Council of Transit Telephone company M of Fin - Budget Courts M of Fin - Income Attorney General M of Energy and Mines Universities and schools M of Fin - Treasury National Fin. Corp. Cent. Bank y = -0.05x R 2 = 0.50 r=-0.71 Municipality Presidency Electricicy company Public Prosecutor Meritocracy in recruiting Human Resources and in the promotions
17 Diagnostic Surveys as Input to Action Program Design and Strategy: Illustration 1. Surveys of citizens, firms and public officials, complemented by Other diagnostics/hard Data: most corrupt agencies identified, and institutional vulnerabilities behind such corruption? 2. How Costly is corruption in afflicted agencies? 3. From answers to 1 and 2 above: Prioritization 4. Are identified priorities Politically feasible? 5. Identifying credible Quick Wins for momentum 6. Design of short & longer term Strategy and Steps 7. Capacity Building and Resource Requirements
18 There are more than enough Challenges Strengthening Survey Data: 1) from general opinions/perceptions to results based on experiences; 2) quantify; 3) triangulate; 4) measure margin of error Understand thoroughly causes of corruption Confront Empirically: Capture/Grand Corruption Complement with extra hard data: which? Complement with qualitative information: which? (focus group, studies, etc) How to go from information to action?
19 To sum: How can we identify the priorities to improve governance when a country has budget restrictions? A road map to guide us in this process.
20 Three key elements to keep in mind 1. Identify the weak institutions that need reform and identify the institutions that can serve as an example of good governance 2. Identify the different types of corruption administrative, capture of the state, bidding, theft of goods and public resources, sell of licenses and regulations which cost more? 3. Identify governance determinants
21 1. Analyzing the strengths and weaknesses of government institutions The variety of quality in governance between institutions of a country are key to identifying strengths and weaknesses
22 2. Corruption can manifest itself in different forms A. Bribes to facilitate transactions and administrative processes. B. Bribes to public officials to influence the legislative process, judicial and regulatory decisions (capture of State) C. Bribes to win public contracts D. Leak/losses in budget and mis-allocation of funds and resources E. Purchase of public administration positions and nepotism
23 A. The direct cost of administrative corruption on enterprises: an example (Estimated % of monthly income towards bribes or security) Bribes Security Big Average Small
24 B. Capture of State / Improper Elite Influence on promoting corruption at a higher level Bribes frequency to favor private interest: (According to Officials / Enterprise Employers) Towards Judicial Authorities Towards Public officials influencing ministry/presidential decisions Towards Parliamentary to influence the law Towards local authorities Towards regulatory organisms Towards officials of the Central Bank Officials Enterprise Employers 30 High
25 Who has unduly influenced the State? (According to officials and enterprises of a Latin American Country) (Main sources of corruption/ capture of estate : % significant response Drug Trafficking Economic Groups Multinational Enterprises Organized Crime [includes drug trafficking] Professional Associations Labor Union Officials Employers %
26 3. The components of governance - Controlling Corruption - Rule of Law - Regulatory Burden - Governmental Effectiveness - Politic Stability - Fundamental/Civil Liberties
27 Which Public Administrative Characteristics influence the determinants Internal Transparency Meritocracy Social Involvement and collective action Quality of norms and rules Accountability & citizen voice Rule application and supervision Salary Satisfaction Agency Missions Politicizing Others
28 A Live Test: The Importance of Incentives, Culture, Information: You are approaching your car in the empty and unattended garage late at night You see an envelope on the floor, and you pick it up It contains 20 bills of US $100 each. If no possibility that anyone would know: No cameras, no monitoring, no reporting What would you do with such envelope full of cash?
29 A Probity Self-Test Test What would you do with such envelope full of cash? A. If no one would know: B. If 30% probability that somebody would know 16% Keep 45% 45% Undecided Undecided 39% Report and Return Funds 22% Undecided 75% Report and Return Funds 3% Keep Combined Results from Option Finder and Website Survey
30
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