Becoming Denmark. Historical pathways to European control of corruption
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1 Becoming Denmark Historical pathways to European control of corruption Alina Mungiu-Pippidi Hertie School of Governance ANTICORRP FP7 EU Framework Project
2 The problem Any social group of people living together for any length of time, from a hiking expedition to a nation sharing territory faces the problem of having to share resources to produce collective goods How to achieve the management of common (i.e. pooled) resources on the basis of fairness and integrity old problem imperfectly solved Modernity is only one solution to this, often presumed as exclusive solution and always presumed as implicit most assistance budgets tailored to this
3 Where do we get it wrong? Modernity presumptions: representative leaders are trustworthy principals (since they are elected), bureaucratic agents (civil servants or magistrates) are autonomous from private interests, voters are effective principals at least at elections time Huntington s observed that corruption grew with modernization in the Third World, opposite to Europe Markets are hardly competitive in developing countries (of which many are not developing) The invisible hand often acts to promote the welfare of those who are already well-off while pushing down the vast majority (institutional losers) Elites oppose change or support it only formally (institutional winners)
4 Better an island; and a democracy, maybe 2011 CC lowest CC mid tercile tercile CC top tercile Total Free Partially free Not free Total Liberal democracies do ten times better than autocracies in clean countries 50/5 (of which 21 islands) But two out of three corrupt countries are free and partly free (89 pluralist/42 not free); of former, 59 are electoral democracies 26/04/2016 4
5 Weber s status society, Mousnier s estates State-society theory Interpersonal exchanges (particular versus universal) Eisenstadt and Roniger Extractive versus inclusive institutions- Acemoglu and Robinson Power distance and individualism Hofstede Open versus limited access order North
6 My research questions Why do some societies manage to control corruption, so it manifests itself only occasionally, as an exception, while other societies do not and remain systemically corrupt? And is the superior performance of this first group of countries a result of what they do (as assistance industry believes, and this is why we transfer institutions ) or of who they are (their formal institutions work because certain behavior is already there)? How has control of corruption got built historically and what lessons we can derive from this for current anticorruption policies?
7 My research strategies caring for contexts, learning from achievers Develop reliable indicators and measurements sensitive to change and policy intervention Document policy interventions and compare across countries checking for progress Compare achieving countries versus non-achievers, their regions Process trace change, historical and contemporary Instrument- EU funded research grants FP7 ANTICORRP, DIGIWHIST Horizon 20-20, based on consortia
8 From Cicero to UNCAC Can we have a definition of corruption which is universal (across history and regimes) but also bounded? Corruption cannot be ANY abuse of trust including conversion of authority into undue private profit but also private-private dishonest behavior (cheating, fraud) Public corruption as systematic abuse of PUBLIC authority to channel universal PUBLIC resources to particular PRIVATE interests Presumes public interest and ethical universalism as main value 170 ratifying state parties
9 Operational Corruption at macro level = particular distribution of PUBLIC goods leading to undue PRIVATE profit Control of corruption= capacity of a given society to keep corruption an exception We can measure what is rule and what is exception and how this changes (public contract data, subnational transfers) I measure favoritism, state capture, particularism
10 Example- How control of corruption does NOT go up when an ACA is created =year ACA came into power ICRG Control of Corruption 26/04/
11 Fondurile cheltuite Example- how govt party mayors get all floods fund EUR (millioane) Indice clientelism Ponta Share of funds for main govt party % Share of vote in local elections of govt party % 2004 (SDP) 2008 (Liberals) 2010 (Democrat Liberals)
12 Example- how favorite firms change with elections elections Source: MaKAB, Note: market share=total value of contracts won / total value of contracts won in EU funded construction in time t
13 My argument - Parsimonious model of control of corruption over time as equilibrium Factor 1- State scope - Size of public goods delivered (Resources/opportunities) Factor 2- Power discretion Political AND social pluralism, power distance (Constraints/deterrents)
14 Control of corruption in time Power discretion Waquet s Florence Potential public spoils time
15 Simple prescriptions- reduce potential spoils, increase watch based on losers Opportunities: Power discretion Material resources vs Constraints: Autonomous judiciary Demanding citizens Corruption Control of Corruption 26/04/2016
16 Three modes of corruption control- I- Monarchy Autocratic Favor (particularism) is rule of game, so corruption is associated loss of favor. One principal and high occasional repression Absolute to constitutional development of bureaucracy and transition The longest enduring monarchies have successful transitions from patrimonialism A third of the world s best governed countries are traditional monarchies mostly constitutional but not only and two thirds of present monarchies rank in the top category of good governance.
17 Three modes of corruption control- II, III Elite Republics. Ethical universalism is rule of game, so corruption is factionalism and factional distribution. All elite members are principals and surveillance (prevention) rules Democracy. Principal is unclear, diffuse, disempowered. Both prevention and repression entrusted to agents (bureaucrats). If franchise and party factionalism precedes creation of strong bureaucracy, control of corruption does not get built
18 Contemporary pathways 1. A good principal exists? Enlightened despots - Follow the king of Denmark 2. A modern individualistic society exists with enough demand? Build capacity and a more optimal equilibrium 3. None of the above? Solve collective action problem based on the real principals you have (losers, donors ) and manipulate size (cut down) The Sicilian villagers dilemma
19 GDP per capita PPP (2011 constant international $) Control of Corruption -2.5 (worst) to 2.5 (best) Est Success so far? Estonia- Reducing resources, developing constraints Est
20 Public integrity score 2014 for the EU28: How do countries rank? 26/04/
21 WGI Control of Corruption (-2.5 to 2.5 best) Integrity by developmentwhy human agency 2.5 matters 2 Denmark Singapore New Zealand Netherlands Norway Bhutan Cape Verde Botswana Chile Qatar Barbados Uruguay St. Lucia St. Kitts and Nevis 0.5 Rwanda Burkina Faso Mozambique Liberia Niger Lesotho Myanmar Greece Mexico Argentina Palau Ecuador Kazakhstan Kyrgyz Republic Russia Tajikistan Azerbaijan Iraq Uzbekistan Venezuela Equatorial Guinea Turkmenistan Italy HDI Score (0 to 1 best) 26/04/
22 RESOURCES AN EU IN DIFFERENT SPEEDS: THE R&C DIVIDES WITHIN EUROPE CONSTRAINTS Low Medium High High Medium Low Finland France Netherlands Denmark Sweden Estonia UK Ireland Belgium Lithuania - Luxembourg Latvia Hungary Germany Portugal Greece Austria Spain Slovenia Malta Italy Cyprus Poland Croatia Slovak Rep. Czech Rep. Romania Bulgaria 26/04/2016
23 THANK YOU!
24 WHAT TO DO: REDUCE RESOURCES AND OPPORTUNITIES Cut red tape to reduce administrative discretion (time to import, export, pay taxes and so on) Streamline regulation to reduce informality Increase electronic access to all public services and foster more Internet access, usage Increase transparency, especially fiscal transparency (online expense tracking systems become fast best practice) Far more transparency needed for EU funds Publish all affiliations, relations (lobby registers) accounts of officials to prevent conflict of interest, fiscal evasion and corruption Cyprus Estonia Hungary Lithuania Bulgaria Czech Republic Greece Latvia Poland Italy Romania
25 WHAT TO DO: INCREASE CONSTRAINTS, BUT NOT JUST LEGAL CONSTRAINTS Italy Portugal Slovakia Slovenia Spain Bulgaria Czech Republic Greece Latvia Poland Romania Protect media from capture (transparency of ownership, government advertising) Protect and encourage civil society and Internet media watchdogs Adopt social accountability designs to protect EU funds (involve local stakeholders and consumers in the planning and monitoring of EU funds) Develop judicial capacity Develop further audit and monitoring capacity
26 (1) (2) (3) HDI 1.861*** 2.203*** 2.125*** (0.000) (0.000) (0.000) Administrative Burden (0.222) Judicial Independence (0.720) Administrative Burden x 0.032* Judicial Independence (0.010) ME Administrative Burden 0.099* (0.008) Budget Transparency *** (0.000) Freedom of the Press * (0.026) (0.785) Budget Transparency x 0.055*** Freedom of the Press (0.000) ME Budget Transparency (0.385) E-Government (0.157) E-Government x 0.027** Freedom of the Press (0.001) ME E-Government 0.072* (0.009) Constant *** ** *** (0.000) (0.005) (0.000) Countries Adj. R-squared CONTROL OF CORRUPTION AND INTERACTION OF ITS DETERMINANTS
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