Transcript fighting corruption and poverty– our approach so far

FIGHTING CORRUPTION
AND POVERTY: ARE WE
GETTING IT RIGHT?
Presentation for Workshop:
From Montesinos to PRSPs
October 21 & 22, 2002
Helen Sutch, PRMPS
What is the logic of today’s
workshop?
• Our focus on corruption springs from the
recognition that it is the most serious single
obstacle to achieving the Bank’s overall objective
of poverty reduction.
• But are we tackling corruption in the right way?
How should we go about the task of helping
countries develop institutions that will be resistant
to corruption and effective in reducing poverty?
Good governance leads to
higher investment & growth
% Investment share in GDP
Income per capita Growth Rate
2%
20%
1.5%
1%
0.5%
15%
0%
-0.5%
-1.0%
10%
-1.5%
High
Medium
Low
High
Medium
Low
Quality of Governance
Quality of Governance in this case was measured by perceptions of 4,000 firms in 67 countries
on: (i) protection of property rights; (ii) judicial reliability; (iii) predictability of rules; (iv) control of
corruption. Source: World Development Report Survey, 1997
Good governance goes hand in hand with better
development outcomes
Infant Mortality and Corruption
Per Capita Income and
Regulatory Burden
90
80
12,000
70
10,000
60
8,000
50
40
6,000
30
20
4,000
10
2,000
0
0
Weak
Development
Dividend
x
Average
Good
Control of Corruption
Weak
x
Average
Regulatory Quality
Development
Dividend
Literacy and Rule of Law
Good
Per Capita Income and
Voice and Accountability
100
10000
9000
75
8000
7000
6000
50
5000
4000
25
3000
2000
1000
0
0
Weak
x
Development
Dividend
Average
Rule of Law
Good
Weak
x
Development
Dividend
Average
Strong
Voice and Accountability
Note: Based on a collaborative research project, the bars depict the simple correlation between good governance and development outcomes.
The line depicts the predicted value when taking into account the causality effects (“Development Divided”) from improved governance to better
development outcomes.
Milestones in Anticorruption
•
•
•
•
•
1996 JDW’s Annual Meetings speech
1997 WB Anticorruption Strategy
WDRs 1997, 2000, 2001
“Assessing Aid”
1999 onwards: almost every CAS assesses
governance and corruption
• 2000 “Anticorruption in Transition” defines state
capture, administrative corruption, and the
“anticorruption environment”
Good governance and anticorruption have
many dimensions
Structure of Government
•Executive decision-making structure
•Legislative oversight
•Independent and effective judiciary
•Decentralization and intergovernmental relations
•International dimensions: rules for foreign
investors, trading partners, donors
Civil Society Voice
& Participation
• Freedom of information
• Public hearings
• Role of media/NGOs
• Governance monitoring
Political Accountability
• Political competition, credible political parties
• Transparency in party financing
• Disclosure of parliamentary votes
• Asset declaration, conflict-of-interest rules
Anticorruption
Competitive Private
Sector
• Economic incentive framework/policies
• 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
• Public expenditure management (budget preparation and execution,
financial accountability, procurement, audit)
• Decentralization with accountability
• Service delivery (health, education, infrastructure, courts and other
dispute resolution mechanisms)
• Tax and customs
Understanding the environment,
working with the people in it…
• Anticorruption surveys of households, businesses
and public officials (PREM, WBI), also surveys of
courts and investment climate, public expenditure
tracking
• Institutional and Governance Reviews
• Development of governance indicators
• Workshops to catalyze the preparation of country
strategies
• WBI core course for senior officials
THEME 3: Bank lending focuses
more on institutional reform ...
$ billion
(data from 5-year PREM portfolio database)
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Investment
Adjustment
F Y 19 9 9
F Y 2000
F Y 2001
Governance and anticorruption knowledge
sharing has grown…integrating PREM,
DEC, WBI, Legal, and OPCS across
thematic groups…
• Anticorruption
• Administrative and
civil service reform
• Decentralization
• E-government
• Legal institutions of
market economy
• Public expenditure
management
• Tax policy and
administration
The PRSP process is an important link…
• All PRSPs recognize importance of governance (a
major advance, comparing pre-PRSP world)
• Governance deficits becoming explicit
• Civil society participation spurring some demand
for good governance
• Improved understanding of implementation
capacity constraints
But what is the common factor?
• Stovepiping:
or methodological separatism
– we deal with institutions as though they were as
separate as their names indicate: courts,
parliament, civil service, tax administration…
– We assume that the private and public sectors
are separate and different, and respond to
different incentives…
Questions for the day
• As we move into PRSP and LICUS territory, are
we tackling anticorruption and governance in the
right way?
• Do we need to do more to understand the drivers
of corruption before we can shape and implement
effective strategies?
• Can we do better? And if so..
• What, concretely, should we change?