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Developing Countries
Governance &
The World Bank Anticorruption Core
The World Bank Course, page ‹#›
Focus for Today: Outline
Importance of Good
Governance & Anticorruption
Governance: Framework &
Measurement
Priority Areas for Improving
Governance
Operational Strategy on
Anticorruption
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
Governance – Good and Bad
Lessons from the last 50 years
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
Good Governance matters for
investment and growth
% Investment share in GDP Income per capita Growth Rate
20% 2%
1.5%
1%
0.5%
15%
0%
-0.5%
-1.0%
10% -1.5%
High Medium Low High Medium Low
Governance Quality
Governance Quality measured by perception of 4000 firms in 67 countries on: (i) protection of property rights; (ii) judicial
reliability; (iii) predictability of rules; (iv) control of corruption. World Development Report Survey 1997
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
The direction of causality …
Growth causes governance to … and better governance causes
improve ... growth
Importance of Good
Governance & Anticorruption
Governance: Framework
Priority Areas for Improving
Governance
Operational Strategy on
Anticorruption
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
Governance & Corruption – Not the same thing!
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
Governance Systems: Supply and Demand
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
Governance Systems:
Actors, Capacities and Accountability
Citizens/Firms
Executive-Central Govt
Civil Society
Citizens/Firms
Citizens/Firms
Check &
& Private
Balance
Sector
Institutions Cross-cutting Control
• Civil Society
• Parliament Agencies (Finance, HR)
Watchdogs
• Judiciary
• Media
• Oversight
• Business
institutions
Associations
Service Delivery &
Regulatory Agencies
Executive-Central Govt
PatronagCivil Society
Citizens/Firms
Citizens/Firms
Check &
Balance e& & Private
Sector
Institutions Cross-cutting Control nepotis • Civil Society
• Parliament Agencies (Finance, HR)
• Judiciary
m Watchdogs
• Media
• Oversight
• Business
institutions
Associations
administrati
Service Delivery &
ve Regulatory Agencies
corruption
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
Two Governance Patterns
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
Good Governance has many dimensions
Citizens/Firms
Political Accountability
• Political competition, broad-based political parties
• Transparency & regulation of party financing
• Disclosure of parliamentary votes
Citizens/Firms
declaration, conflict of
(PACs, PECs) interest rules
Citizens/Firms
Political Accountability
• Political competition, broad-based political parties
• Transparency & regulation of party financing
• Disclosure of parliamentary votes
Citizens/Firms
declaration, conflict of
(PACs, PECs) interest rules • Participatory country
Citizens/Firms
Importance of Good
Governance & Anticorruption
Governance: Measurement
Priority Areas for Improving
Governance
Operational Strategy on
Anticorruption
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
Two Approaches to Measuring Governance
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
Control of Corruption: one Aggregate Indicator
(selected countries from 204 worldwide, for illustration, based on 2004 research data)
2.5
Margins
Good of Error
Governance
Governance
Level
Poor Gov-
ernance
-2.5
EQUATORIAL GUINEA
UNITED KINGDOM
KOREA, NORTH
NETHERLANDS
KOREA, SOUTH
BANGLADESH
GREECE
TURKMENISTAN
UZBEKISTAN
SOUTH AFRICA
NEW ZEALAND
FRANCE
VENEZUELA
FINLAND
NORWAY
BOTSWANA
CHILE
MAURITIUS
RUSSIA
SLOVENIA
TAJIKISTAN
SPAIN
ITALY
ZAMBIA
Source for data: : 'Governance Matters IV: Governance Indicators for 1996-2004’, D. Kaufmann, A. Kraay and M. Mastruzzi,
(http://www.worldbank.org/wbi/governance/govdata/); Colors are assigned according to the following criteria: Dark Red, bottom 10 th percentile rank; Light
Red between 10th and 25th ; Orange, between 25th and 50th ; Yellow, between 50th and 75th ; Light Green between 75th and 90th ; Dark Green above 90th.
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
PEFA’s Performance
Measurement Framework
Budget Realism:
Accountability and
Is the budget
Transparency:
realistic, and
implemented as Are effective external
intended in a financial accountability
predictable manner? and transparency
Six PFM arrangements in place?
System
Comprehensive,
Policy-based, budget: Aspects
Does the budget
Control:
capture all relevant
fiscal transactions, and Is effective control and
is the process, giving stewardship exercised
regard to government in the use of public
policy? funds?
Comprehensive Fiscal
oversight: Information:
Are the aggregate fiscal Is adequate fiscal, revenue and expenditure
position and risks are information produced and disseminated to meet
monitored and managed? decision-making and management purposes?
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
The “Bribe Fee” List
Unofficial payments by firms in Ukraine
Enterprises
Type of License/Service/”Favor” Average fee required admitting need to pay
(1996) “unofficially”
Post Office
Polyclinic/Health Services
Agency of Immigration &
Citizenship
Prosecutor
Customs Service
Courts
Police
0 10 20 30 40
Percent giving favorable rating Governance &
Anticorruption Core
The World Bank Course, page ‹#›
The Challenge of State Capture
Proportion of firms
affected by capture of …
30
Parliamentary Votes
Presidential Admin. Decrees 25
15
10
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
Focus for Today: Outline
Importance of Good
Governance & Anticorruption
Governance: Framework &
Measurement
Priority Areas for Improving
Governance
Operational Strategy on
Anticorruption
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
Priority Areas for Improving Governance
Strengthening Public Management Systems
Strengthening public finance management & accountability
E-procurement for greater transparency and competition
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
Strengthening PFM Systems a key priority
Scaling up of donor
assistance requires Increasing
sound PFM systems recognition that
and reduced "ringfencing"
corruption in partner projects will not work
countries
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
Bank interventions to build capacity:
multiple targets and tools (AFR)
Budget realism Tanzania MTEF
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
‘Demand-side’ interventions to
strengthen accountability in PFM
Civil Society Oversight; Strengthening Supreme
Transparent, transparent, competitive Audit Institutions
competitive e- procurement (Hungary)
procurement (Slovakia)
(LAC)
Strengthening Public
Accounts Committees
of Parliament
(Kenya, Ghana, Zambia -- Procurement
AFR)
oversight by
CSOs
(Philippines)
Strengthening Public
Accounts Committees of
Participatory Parliament
Budgeting,
Puerto Alegra (India)
(Brazil) Public Expenditure Tracking & Information Campaigns
(Cambodia, Cameroon, Ghana, Madagascar, Mozambique, Papua New
Guinea, Peru, Rwanda, Senegal, Tanzania, and Zambia and on-going in
Azerbaijan and Yemen)
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
Chile’s Internet-based Public Procurement:
Transparency and Competition
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
Civil Society Monitoring for Improved
Service Provision: Bangalore
100 94 92 96
90 85
78 77
80 73 73 73
67
70
% satisfied
60
47
50 41 42
40 34 34 32 32
30 25
20 16 14
6 9
10 5 4
n/a 1 n/a
0
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ty
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au
au
ho
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ity
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El
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Te
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Pu
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W
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La
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a
Tr
1994 Agencies
1999 2003
2.0
1.5
1.0
0.5
0.0
1990 1991 1993 1994 1995 1999
Intended Grant Amount Received by School (mean)
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
Media,Transparency, and Combating Corruption
“BIR Officials Amass Unexplained Wealth”
By Tess Bacalla , Philippine Center for Investigative Journalism
Owner: Regional Director in the Bureau of Internal Revenue; forced to resign;
currently facing corruption charges; other officials suspended, also facing charges
CAR MODEL BENEFICIAL OWNER REGISTERED OWNER
Nissan Patrol Edwin Abella Sulpicio S. Bulanon Jr.
BIR Reg'l Director, 1817 Jordan Plains Subd.,
Quezon City Quezon City (listed address of
Abella in his SALs)
Ditto Merrick Abella (son of Abella)
Suzuki Grand
24 Xavierville, Loyola Heights,
Vitara Q uezon City
Nissan Cefiro Ditto Elizabeth S. Buendia
152 Road 8,-asa,
Pag Quezon City
BMW Lucien E. Sayuno Limtra Dev. Corp.
BIR Reg'l Director, Zone 4, Dasmariñas, Cavite
Makati City
BMW Ditto Marie Rachel D.ses
Mene
c/o Metrocor and Holdings, G&F,
Makati City
Honda Accord Danilo A. Duncano Daniel Anthony P. Duncano
BIR Reg'l Director, 2618 JP Rizal, New Capital Estate,
Quezon City Quezon City
Mitsubishi L200 Corazon P. Pangcog Alberto P. Pangcog (husband)
Asst.Reg'l Director, B2 L23 Lagro Subd., Quezon City
Valenzuela City
Honda-VCR Ditto Alberto P. Pangcog
9 Ricardo St., Carmel 1 Subd.,
Quezon City
Honda-VCR Ditto Ditto
BMW FlordelizaVillegas
P. Charito P. Sico
Revenue District Of’cer 8 Ma.Elena St., Carmel 1 Subd.,
Cabanatuan City Quezon City
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
Leadership & Ethics
Beyond accountability systems, leadership and
ethics in public service shape standards of
governance and anticorruption
Leaders set standards for integrity, catalyze
politically difficult change
Way forward is to empower and develop critical
mass of reform-minded leaders committed to
integrity
Innovative pilots in transformational leadership to
engender paradigm shift: Madagascar, Burundi,
Kenya
Global Integrity Alliance: Peer support network of
public officials committed to ethics in public
service
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
Strengthening Public Service Ethics
5 Cs to Counter Corruption
Creating a sense of
belonging to society Creating a sense of
Compassion to care for the
more needy in society
Strengthen
Values & Ethics:
Counter
Corruption
Courage Cosmology
Importance of Good
Governance & Anticorruption
Governance: Framework &
Measurement
Priority Areas for Improving
Governance
Operational Strategy on
Anticorruption
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
Corruption pose three significant risks
Development
Effectiveness Risk
Reputational Risk
Fiduciary Risk
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
Challenges in Identifying High-Risk
Countries
1 Afghanistan 21 Kyrgyz Rep. Country Country 2005
2 Angola 22 Lao, PDR Rank Source: TI Corruption CPI
3 Azerbaijan 23 Lebanon Perceptions Index (CPI) 2005 Score
4 Bangladesh 24 Liberia 117 Afghanistan, Bolivia, Ecuador 2.5
5 Belarus 25 Libya Guatemala, Guyana, Libya
6 Cambodia 26 Myanmar Nepal, Philippines, Uganda
7 Central African. Rep. 27 Nigeria 126 Albania, Niger, Russia, Sierra 2.4
Leone
8 Chad 28 Paraguay
9 Comoros 29 Sierra Leone 130 Burundi, Cambodia, Congo 2.3
(Republic), Georgia, Kyrgyzstan,
10 Congo, Dem. Rep. 30 Somalia Papua New Guinea
11 Cote D'Ivoire 31 Sudan 137 Azerbaijan, Cameroon, Ethiopia, 2.2
12 Djibouti 32 Swaziland Indonesia, Iraq, Liberia, Uzbekistan
13 Equatorial Guinea 33 Tajikistan 144 Congo (Democratic Republic), 2.1
14 Gambia, The 34 Togo Kenya, Pakistan, Paraguay,
Somalia, Sudan, Tajikistan
15 Guinea 35 Turkmenistan
151 Angola 2.0
16 Guinea-Bissau 36 Uzbekistan
17 Haiti 37 Venezuela 152 Cote d’Ivoire, Equatorial Guinea, 1.9
Nigeria
18 Iraq 38 Yemen, Rep.
39 Zimbabwe 155 Haiti, Myanmar, Turkmenistan 1.8
19 Kazakhstan
20 Korea, North (Countries in blue are inactive Bangladesh, Chad
158 1.7
WB borrowers)
Notes: Data on left: Countries listed in alphabetical order using 2004 data. These countries scored in the bottom quartile on the main corruption question in the World Bank’s 2004
CPIA which covered 135 countries AND scored in the bottom quartile on the 5 questions on broader governance issues in the 2004 CPIA OR scored in the bottom quartile on the 2004
Control of Corruption component of the WBI/DEC Kaufmann-Kraay Aggregate Governance Indicator. Countries not included in the 2004 CPIA but included in the WBI/DEC index are
here if they fell in the bottom quartile of that index (Afghanistan, Iraq, North Korea, Liberia, Libya, Myanmar, and Somalia). This list includes inactive borrowers and ineligible countries.
Inactive countries are defined as those with no lending/grants in SAP for FY04-06.
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
Anti-Corruption Strategy
World Bank
Anticorruption as
key filter in design Support international
of country efforts to reduce
assistance corruption
strategies
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
Addressing Corruption in CAS’s
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
Major programs launched…
…with some evidence of success
Russia
Latvia (customs/treasury)
Ukraine
Albania (inspections) Kyrgyz Republic
(tax admin)
(public admin.) (governance reform)
Jordan
(civil society)
Cambodia
Ghana (PE (PE; forestry)
Guatemala accountability) Philippines
(procurement)
(diagnostic
to action Gabon Indonesia
program) (water/electricity)
(local
governance)
Bangladesh
Colombia Uganda
Pakistan (NGOs in
(diagnostics (education) social sectors)
(devolution)
& civil society) Tanzania India – Andra Pradesh
(PSR) Ethiopia (power; e-gov); Karnataka
(decentralization) (right to info)
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
Lessons learned:
Deeper challenges in high-risk countries
Governance &
Anticorruption Core
The World Bank Course, page ‹#›
Reducing corruption in high-risk countries:
Priorities for action in the next stage
Better understanding and management of
political economy of reforms