1 Capacity Enhancement, Governance, and Evidence-Based Diagnostics and Assessments Background handout for discussion at

Capacity Enhancement, Governance, and Evidence-Based Diagnostics and Assessments

www.worldbank.org/wbi/governance

Background handout for discussion at the EILTWBIs Leadership TeamDK -- WBIGG

WBI, February 4th, 2004

Institutions &Governance MattersMissing Link in Washington ConsensusFirst Summers Lesson from ExperienceGovernance as the weak link in CB/CEData Power: governance key for developmentYet 5 main challenges about institutions: i) which ones? (prioritizing among institutions & vulnerabilities Diagnostics); ii) how to? (Implementation Expertise); iii) where to? (Sectoral Mainstreaming) iv) measure, monitor, research Lessons v) Localize Know-how and Action Programs

Governance World Map :Control of Corruption, 2002Source for data: http://www.worldbank.org/wbi/governance/govdata2002 ; Map downloaded from : http://info.worldbank.org/governance/kkz2002/govmap.asp Colors are assigned according to the following criteria: Red, 25% or less rank worse ( bottom 10% in darker red); Orange, between 25% and 50%; Yellow, between 50% and 75%; Light Green between 75% and 90% ; Dark Green above 90%

Where is Financial Aid Well Used, Where Wasted? Global Poll (% firms rating satisfactory [6-10])

% firms rating satisfactory

Sources: Global Poll 2003 and KK02. Global Poll questions: How much of a priority does the WB give to helping your country reduce corruption (1=none, 10=top) ; How good of a job does the WB do in helping your country reduce corruption (1=bad, 10=excellent)

Listening to Stakeholders: Analysis of Responses on Donor Aid and Anti-CorruptionFigure 9d : Most Important Role for Donors in Helping Country on Anti-Corruption (A-C)

Percentage of Responses selected as Most Important Role for Donors

Source: World Bank Institute Governance WebSurvey, http://www.wbigf.org/hague/hague_survey.php3. Based on 2,427 responses.

Data

6. What should be the MOST important role for donors in helping countries fight corruption?

Donors out of A-C3.2%

Collaborate w/ NGOs11.4%

Control corruption in Donor projects13.3%

Awareness/Education20.9%

Work w/ Country A-C25.4%

Pre-Conditionality25.9%

Total100.1%

Conditionality

Work with countries

Awareness/Educate

Control corruption in donor projects

Collaborate with NGOs

Donors out of this

Total1509

Role for Donors bar

0.032

0.114

0.133

0.209

0.254

0.259

Anti-Corruption Focus and Quality Assessment by the World Bank Global Poll Respondents, by extent of Corruption in Country (% firms rating satisfactory [6-10])

% firms rating satisfactory

Sources: Global Poll 2003 and KK02. Global Poll questions: How much of a priority does the WB give to helping your country reduce corruption (1=none, 10=top) ; How good of a job does the WB do in helping your country reduce corruption (1=bad, 10=excellent)

Note: The vertical axis depicts the firms net effectiveness evaluation of World Banks performance in supporting private-sector development (PSD) in their country. Net effectiveness is calculated as the difference between the percent of respondents reporting the institution to be effective minus the percent of respondents reporting it to be ineffective. Each set of two columns displays the net effectiveness ratings provided by countries with a good record in given constraint (in blue) versus those provided by countries with a poor performance in such constraint (in black). Calculations are based on country averages.Source: Executive Opinion Survey (GCR) 2002.

Corporate Governance and Corporate EthicsSource: EOS 2002-03. % firms rate satisfactoryCorporate GovernanceCorporate Ethics

Soundness of Banks vs. Control of Corruption

SoundRelatively UnsoundSource: Executive Opinon Survey 2002; KKZ 2000/01Governance Indicators, http://www.worldbank.org/wbi/governance/govdata2001.htm The Sample of 80 countries has been divided into 3 sub-samples according to their rating in Control of Corruption. The 3 columns therefore represent the average ratings for Soundness of Banks within each sub-sample. The fitted line instead represents the predicted value of Bank Soundness controlling for the effects of GDP per capita and Regulatory Quality through an OLS regression. Each fitted value is computed as the sum of the estimated constant plus the value of Control of Corruption within each group times the estimated coefficient plus the mean values of Regulatory Quality and GDP per capita times their respective estimated coefficients.

Annual GDP Growth (%)Transparency, Parliaments, Corporate Ethics, and GDP GrowthSource: Annual GDP growth over 1999-2001 WDI 2002; GDP is computed in PPP terms. The various transparency / governance variables drawn from Executive Opinion Survey, 2002.

Kenya the Mezzo Level of CE Assessment 22 clustersSource: EOS 2003 WEF, preliminary. Percentile ranks based on comparative performance among the 103 countries in the sample. All variables rated from 0 (very bad) to 100 (excellent).

Health Gap vs. Active Capture (High Level Corruption)r = 0.83Large GapSmallLowHigh BriberySource: EOS 2003

Chart2

5.1714285714

6.652173913

6.393442623

2.95

3.156626506

6.4078947368

2.5

6.4810126582

4.5454545455

6.5396825397

5.4417177914

6.5357142857

2.1081081081

6.5662650602

6.0595238095

4.8425925926

5.5737704918

4.4428571429

4.4454545455

2.7757009346

1.7619047619

6.1714285714

6.5510204082

5.27

6.085106383

3.7076923077

5.7411764706

2.1111111111

2.652173913

4.4303797468

3.3888888889

5.5872093023

5.3711340206

6.5245901639

6.64

6.3902439024

3.2333333333

5.0943396226

1.4074074074

6.3174603175

4.7714285714

5.075

4.1428571429

4.1458333333

6.0689655172

2.5694444444

4.7529411765

6.6133333333

3.8039215686

4.3097826087

5.3507462687

1.8787878788

4.9824561404

6.7173913043

5.8529411765

4.2291666667

6.4285714286

2.6025641026

5.09375

6.1346153846

6.2475247525

6.5866666667

5.1914893617

2.0595238095

4.0579710145

6.5633802817

6.4162436548

1.962962963

6.375

5.7432432432

6.7230769231

6.2307692308

6.3829787234

5.4456521739

5

5.6458333333

6.1178707224

6.4444444444

5.58

2.7203389831

3.7887323944

3.5632183908

6.2096774194

3.2463768116

5.2941176471

2.3571428571

2.4722222222

3.023255814

5.9852941176

5.0222222222

5.8524590164

3.8108108108

6.152173913

5.9387755102

6.2727272727

4.3230769231

5.2461538462

4.9423076923

6.6764705882

5.1694915254

6.3728813559

6.7272727273

Bribery to Affect Laws, Regulations..

Rich-Poor Health Gap

ARG

AUS

BRA

CMR

CHL

CHN

COL

CZE

DNK

ETH

FRA

HTI

HKG

ISL

JOR

LVA

LTU

MLI

MAR

NOR

PRY

PER

ROM

SGP

SVK

LKA

SWE

TZA

TUN

VNM

ZWE

TABLE

PERCENTAGE FIRMS SATISFACTORYCodeCountryCodeQ0512fQ0706REVERSED0.8309987479

DZAAlgeria3.885.17CountryCode

Corporate GovernanceCorporate EthicsAGOAngola5.476.65ETHIOPIAETH

Country2003200220032002ARGArgentinaARG5.686.39Congo, Dem. Rep. (Zaire)ZAR

OECD75.264.385.284.2AUSAustraliaAUS2.202.95AFGHANISTANAFG

East Asia (NIC)69.740.476.366.7AUTAustria2.203.16NEPALNPL

East Asia dev.52.032.038.833.0BGDBangladesh5.256.41KOREA, NORTHPRK

Former Soviet Union41.638.016.812.7BELBelgium3.052.50MOZAMBIQUEMOZ

Eastern Europe48.235.533.333.8BOLBolivia5.356.48MADAGASCARMDG

South Asia42.120.719.427.8BWABotswana2.774.55CAMBODIAKHM

Sub-saharan Africa53.947.931.038.5BRABrazilBRA4.206.54BURKINA FASOBFA

Middle East North Africa52.235.849.651.9BGRBulgaria3.385.44NIGERNER

Latin America / Caribbean39.128.829.627.9CMRCameroonCMR4.446.54MALIMLI

WORLD54.642.146.048.2CANCanada2.832.11BELARUSBLR

TCDChad5.856.57SOMALIASOM

CHLChileCHL3.236.06RWANDARWA

CHNChinaCHN3.524.84HAITIHTI

COLColombiaCOL4.335.57CHADTCD

CRICosta Rica4.354.44GUINEAGIN

HRVCroatia4.114.45BURUNDIBDI

CZECzech RepublicCZE4.152.78BENINBEN

DNKDenmarkDNK1.541.76TAJIKISTANTJK

DOMDominican Republic5.006.17GEORGIAGEO

ECUEcuador5.266.55LAOSLAO

EGYEgypt3.755.27SIERRA LEONESLE

SLVEl Salvador3.826.09KYRGYZ REPUBLICKGZ

ESTEstonia3.213.71TURKMENISTANTKM

ETHEthiopiaETH4.325.74TOGOTGO

FINFinland1.612.11ERITREAERI

FRAFranceFRA2.652.65PUERTO RICOPRI

GMBGambia3.434.43BOSNIA-HERZEGOVINABIH

DEUGermany2.013.39ARMENIAARM

GHAGhana3.785.59CENTRAL AFRICAN REPUBLICCAF

GRCGreece4.135.37ALBANIAALB

GTMGuatemala5.606.52LIBERIALBR

HTIHaitiHTI5.756.64WEST BANKWBG

HNDHonduras5.546.39CONGOCOG

HKGHong KongHKG2.083.23MAURITANIAMRT

HUNHungary3.515.09MONGOLIAMNG

ISLIcelandISL1.561.41LESOTHOLSO

INDIndia4.666.32GAMBIAGMB

IDNIndonesia4.314.77GUINEA-BISSAUGNB

IRLIreland3.485.08SWAZILANDSWZ

ISRIsrael2.574.14TIMOR, EASTTMP

ITAItaly4.224.15GUYANAGUY

JAMJamaica4.346.07BHUTANBTN

JPNJapan3.492.57FIJIFJI

JORJordanJOR2.814.75DJIBOUTIDJI

KENKenya4.866.61COMOROSCOM

KORKorea, south3.383.80EQUATORIAL GUINEAGNQ

LVALatviaLVA3.764.31MACAOMAC

LTULithuaniaLTU3.655.35MARTINIQUEMTQ

LUXLuxembourg2.061.88SOLOMON ISLANDSSLB

MKDMacedonia4.614.98CAPE VERDECPV

MDGMadagascar4.976.72MALTAMLT

MWIMalawi3.155.85SURINAMESUR

MYSMalaysia2.994.23LUXEMBOURGLUX

MLIMaliMLI4.976.43BARBADOSBRB

MLTMalta2.442.60MALDIVESMDV

MUSMauritius3.915.09BAHAMASBHS

MEXMexico3.776.13BELIZEBLZ

MARMoroccoMAR3.876.25BRUNEIBRN

MOZMozambique4.686.59ICELANDISL

NAMNamibia3.825.19ST. LUCIALCA

NLDNetherlands2.222.06VANUATUVUT

NZLNew Zealand1.684.06SAMOAWSM

NICNicaragua4.916.56FRENCH GUIANAGUF

NGANigeria4.996.42MICRONESIAFSM

NORNorwayNOR2.221.96BERMUDABMU

PAKPakistan4.386.38KIRIBATIKIR

PANPanama4.995.74MARSHALL ISLANDSMHL

PRYParaguayPRY5.336.72TONGATON

PERPeruPER4.556.23ST. VINCENT AND THE GRENADINESVCT

PHLPhilippines5.416.38ANDORRAADO

POLPoland4.165.45ANTIGUA AND BARBUDAATG

PRTPortugal2.935.00DOMINICADMA

ROMRomaniaROM5.475.65SAO TOME AND PRINCIPESTP

RUSRussia4.666.12SEYCHELLESSYC

SENSenegal4.336.44GRENADAGRD

YUGSerbia4.725.58ST. KITTS AND NEVISKNA

SGPSingaporeSGP1.572.72CAYMAN ISLANDSCYM

SVKSlovak RepublicSVK4.603.79LIECHTENSTEINLIE

SVNSlovenia3.103.56MONACOMCO

ZAFSouth Africa3.696.21SAN MARINOSMR

ESPSpain2.973.25NAURUNRU

LKASri LankaLKA4.525.29TUVALUTUV

SWESwedenSWE1.792.36CHINACHN

CHESwitzerland2.002.47INDIAIND

TWNTaiwan2.693.02UNITED STATESUSA

TZATanzaniaTZA3.885.99INDONESIAIDN

THAThailand3.615.02BRAZILBRA

TTOTrinidad and Tobago4.215.85RUSSIARUS

TUNTunisiaTUN2.673.81PAKISTANPAK

TURTurkey4.576.15BANGLADESHBGD

UGAUganda4.855.94NIGERIANGA

UKRUkraine4.666.27JAPANJPN

GBRUnited Kingdom2.174.32MEXICOMEX

URYUruguay3.335.25GERMANYDEU

USAUSA2.924.94VIETNAMVNM

VENVenezuela4.856.68PHILIPPINESPHL

VNMVietnamVNM3.995.17TURKEYTUR

ZMBZambia4.256.37IRANIRN

ZWEZimbabweZWE4.846.73EGYPTEGY

THAILANDTHA

UNITED KINGDOMGBR

FRANCEFRA

ITALYITA

UKRAINEUKR

KOREA, SOUTHKOR

MYANMARMMR

SOUTH AFRICAZAF

COLOMBIACOL

SPAINESP

POLANDPOL

ARGENTINAARG

TANZANIATZA

CANADACAN

ALGERIADZA

KENYAKEN

SUDANSDN

MOROCCOMAR

PERUPER

UZBEKISTANUZB

VENEZUELAVEN

IRAQIRQ

MALAYSIAMYS

ROMANIAROM

TAIWANTWN

UGANDAUGA

SAUDI ARABIASAU

SRI LANKALKA

AUSTRALIAAUS

GHANAGHA

YEMENYEM

SYRIASYR

IVORY COASTCIV

NETHERLANDSNLD

CHILECHL

CAMEROONCMR

KAZAKHSTANKAZ

ANGOLAAGO

ECUADORECU

ZIMBABWEZWE

GUATEMALAGTM

CUBACUB

MALAWIMWI

GREECEGRC

YUGOSLAVIAYUG

BELGIUMBEL

CZECH REPUBLICCZE

ZAMBIAZMB

HUNGARYHUN

PORTUGALPRT

TUNISIATUN

SENEGALSEN

SWEDENSWE

DOMINICAN REPUBLICDOM

BOLIVIABOL

BULGARIABGR

AUSTRIAAUT

AZERBAIJANAZE

SWITZERLANDCHE

HONG KONGHKG

HONDURASHND

EL SALVADORSLV

ISRAELISR

LIBYALBY

PARAGUAYPRY

SLOVAK REPUBLICSVK

DENMARKDNK

FINLANDFIN

NICARAGUANIC

JORDANJOR

PAPUA NEW GUINEAPNG

CROATIAHRV

NORWAYNOR

LEBANONLBN

MOLDOVAMDA

SINGAPORESGP

IRELANDIRL

NEW ZEALANDNZL

COSTA RICACRI

LITHUANIALTU

URUGUAYURY

PANAMAPAN

UNITED ARAB EMIRATESARE

JAMAICAJAM

LATVIALVA

OMANOMN

KUWAITKWT

MACEDONIAMKD

SLOVENIASVN

NAMIBIANAM

BOTSWANABWA

ESTONIAEST

TRINIDAD AND TOBAGOTTO

GABONGAB

MAURITIUSMUS

CYPRUSCYP

BAHRAINBHR

QATARQAT

Differences in quality of healthcare for rich/poor

Bribes for infuencing of laws and policies

TABLE

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r = 0.83

Large

High

Small

Low

Q0706

Bribery to Affect laws, Regulations...

Rich-Poor Health Gap

Health Gap vs. Active Capture

ZWE

VNM

TUN

TZA

SWE

LKA

SVK

SGP

ROM

PER

PRY

NOR

MAR

MLI

LTU

LVA

JOR

ISL

HKG

HTI

FRA

ETH

DNK

CZE

COL

CHN

CHL

CMR

BRA

AUS

ARG

Romania: Disproportionally Negative Impact on the Poor

Institutional Capacity: From revisiting Capacity Building to Measuring and Diagnosing Capacity EnhancementInstitutional Capacity (IC) unbundling into 3 dimensions:Physical capital and hardware (physical infrastructure, computers, etc.) (K); Human and knowledge capital (including organizational & administrative capital, i.e. the institutional software) (HK), and,Governance and political capital (GPK). IC = f (K, HK, GPK)Capacity Enhancement = Changed capacity over time

Empirical Approach to Institutional and Governance Assessments and DiagnosticsMacro: Worldwide Aggregate Governance Indicators: 200 countries, 6 components, periodic it permits broad proxy of governance and capacity enhancement Mezzo (Middle): Cross-Country Surveys of EnterprisesMicro: Specialized, in-depth, in-country Governance and Institutional Capacity Diagnostics: Includes surveys of: i) user of public services (citizens); ii) firms, and iii) public officials

Item #1 above is central for comparative monitoring worldwide and to flag a countrys institutional vulnerabilities. On other extreme, item #3 is in-depth input to concrete capacity enhancement strategy at country level. Due to improvements in cross-country enterprise surveys, item #2 provides a relatively detailed quantitative sense of institutional vulnerabilities, complementary to the other 2.

Overall Evidence is Sobering: Progress on Governance is modest at best, so far Evidence points to slow, if any, average progress worldwide on key dimensions of governance

This contrasts with some other developmental dimensions (e.g. quality of infrastructure; quality of math/science education; effective absorption of new technologies), where progress is apparent

At the same time, substantial variation cross-country, even within a region. Some successes.

And it is early days.

Capacity Enhancement Assessment, Level I: The Macro or Aggregate Governance Indicators+ Some Illustrations from updated Governance Indicators database: 200 countries, 1996-2002, to be continued

Governance: A working definition which contains much of what is relevant for CE Governance is the process and institutions by which authority in a country is exercised: (1) S -- the process by which governments are selected, held accountable, monitored, and replaced; (2) E -- the capacity of govt to manage resources and provide services efficiently, and to formulate and implement sound policies and regulations; and, (3) R -- the respect for the institutions that govern economic and social interactions among them

Operationalizing Governance: Unbundling its Definition into Components that can be measured, analyzed, and worked onEach of the 3 main components of Governance Definition is unbundled into 2 subcomponents:Voice and External AccountabilityPolitical Stability and lack of Violence&TerrorQuality Regulatory FrameworkGovernment EffectivenessControl of CorruptionRule of Law

We measure these six governance components

Sources of Governance DataCross-Country Surveys of Firms: Global Competitiveness Survey, World Business Environment Survey, World Competitiveness Yearbook, BEEPS

Cross-Country Surveys of Individuals: Gallup International, Latinobarometro, Afrobarometer

Expert Assessments from Commercial Risk Rating Agencies: DRI, PRS, EIU, World Markets Online,

Expert Assessments from NGOs, Think Tanks: Reporters Without Borders, Heritage Foundation, Freedom House, Amnesty International

Expert Assessments from Governments, Multilaterals: World Bank CPIA, EBRD, State Dept. Human Rights Report

Inputs for Governance Indicators 2002PublisherPublicationSourceCountry Coverage

Wefas DRI/McGraw-Hill Country Risk ReviewPoll117 developed and developing Business Env. Risk Intelligence BERISurvey50/115 developed and developingColumbia University Columbia U. State Failure Poll84 developed and developing World Bank Country Policy & Institution AssmntPoll 136 developingGallup International Voice of the PeopleSurvey 47 developed and developing Business Env. Risk Intelligence BERISurvey50/115 developed and developingEBRDTransition ReportPoll27 transition economiesEconomist Intelligence UnitCountry IndicatorsPoll 115 developed and developing Freedom HouseFreedom in the WorldPoll192 developed and developingFreedom HouseNations in TransitPoll27 transition economiesWorld Economic Forum/CIDGlobal Competitiveness Survey80 developed and developing Heritage FoundationEconomic Freedom IndexPoll156 developed and developingLatino-barometro LBOSurvey17 developingPolitical Risk ServicesInternational Country Risk GuidePoll140 developed and developingReporters Without Borders Reporters sans frontieres(RSF)Survey138 developed and developingWorld Bank/EBRDBEEPSSurvey27 transition economiesIMD, LausanneWorld Competitiveness Yearbook Survey 49 developed and developingBinghamton Univ. Human Rights Violations ResearchSurvey 140 developed and developing

Control of Corruption: one Aggregate Indicator (selected countries, for illustration, based on 2000/01 research data)Source: KKZ 2000/01POORGOODCorruption LevelMargin of ErrorGood Corruption Control

Governance World Map :Voice and Accountability, 2002Source for data: http://www.worldbank.org/wbi/governance/govdata2002 ; Map downloaded from : http://info.worldbank.org/governance/kkz2002/govmap.asp Colors are assigned according to the following criteria: Red, 25% or less rank worse ( bottom 10% in darker red); Orange, between 25% and 50%; Yellow, between 50% and 75%; Light Green between 75% and 90% ; Dark Green above 90%

Governance World Map :Government Effectiveness, 2002Source for data: http://www.worldbank.org/wbi/governance/govdata2002 ; Map downloaded from : http://info.worldbank.org/governance/kkz2002/govmap.asp Colors are assigned according to the following criteria: Red, 25% or less rank worse ( bottom 10% in darker red); Orange, between 25% and 50%; Yellow, between 50% and 75%; Light Green between 75% and 90% ; Dark Green above 90%

Governance World Map:Regulatory Quality, 2002Source for data: http://www.worldbank.org/wbi/governance/govdata2002 ; Map downloaded from : http://info.worldbank.org/governance/kkz2002/govmap.asp Colors are assigned according to the following criteria: Red, 25% or less rank worse ( bottom 10% in darker red); Orange, between 25% and 50%; Yellow, between 50% and 75%; Light Green between 75% and 90% ; Dark Green above 90%

Governance World Map :Rule of Law, 2002Source for data: http://www.worldbank.org/wbi/governance/govdata2002 ; Map downloaded from : http://info.worldbank.org/governance/kkz2002/govmap.asp Colors are assigned according to the following criteria: Red, 25% or less rank worse ( bottom 10% in darker red); Orange, between 25% and 50%; Yellow, between 50% and 75%; Light Green between 75% and 90% ; Dark Green above 90%

Governance Indicators: Chile 1998 vs. 2002Source for data: http://www.worldbank.org/wbi/governance/govdata2002 ; Colors are assigned according to the following criteria: Dark Red, bottom 10th 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 Indicators: Kenya, 1996-2002Source for data: http://www.worldbank.org/wbi/governance/govdata2002 ; Colors are assigned according to the following criteria: Dark Red, bottom 10th 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.

Another Macro Evidence-Based approach at WBIKAM Kenya : Knowledge Economy Indexes and Pillars

Source: KAM website (www.worldbank.org/kam) Basic Scorecard mode

Knowledge Economy Index and pillar contributionSouce: KAM website (www.worldbank.org/kam) Cross country comparison mode

2nd Level: The Mezzo Empirical AssessmentMore detailed institutional vulnerability assessment possibleComparative across over 100 countriesAnnuallyCluster Comparative Analysis permits identification of (relative) vulnerabilitiesIllustrating Kenya and Chile

Kenya the Mezzo Level of CE Assessment 22 clustersSource: EOS 2003 WEF, preliminary. Percentile ranks based on comparative performance among the 103 countries in the sample. All variables rated from 0 (very bad) to 100 (excellent).

Chile the Mezzo Level of CE Assessment; 22 clustersSource: EOS 2003 WEF, preliminary. Percentile ranks based on comparative performance among the 103 countries in the sample. All variables rated from 0 (very bad) to 100 (excellent).

Politics Can be Measured as Well, and it Matters Inequality of Influence: a major governance challenge

Foreign Firms do not always help improve governance in recipient country Evidence from transition economies beeps survey, 1999

Working with Competitive Business Associations does MatterSource: J. Hellman, G. Jones, D. Kaufmann. 2000. Seize the State, Seize the Day: State Capture, Corruption and Influence in Transition World Bank Policy Research Working Paper 2444.

3rd Level: Country DiagnosticsKey to Localize Know-howKey Input to Action program, MonitoringOne country at the time; staff and resource intensive

Key Features of 3-survey Governance, Anticorruption and Institutional DiagnosticsThree surveys: households, firms, and public officials [triangulation]Questions can be chosen to focus on experience and/or perceptionsSpecially designed and tested closed questions, thoroughly piloted and adapted to local realitiesRigorous technical requirements in implementationLocal institution implements, with World Bank guidanceRecognizes multidimensionality of governance

Type of information elicited (1)HouseholdsExperience on interactions with state bodies for health care, education, drivers licence, police, courts, social benefits, and other agenciesPayments solicited, where, how much and how frequentlyClarification of what people consider to be corruption, perceptions of levels, their sources of information on corruption, extent of knowledge of their rights, duties, and possible recourse

Type of information elicited (2)EnterprisesExperience with customs, tax, procurement, courts, inspections, licences and permitsPayments solicited, where, how frequently, how much paidQuality of govt. services, level of red tapeWays in which firms make their views known (e.g. through business associations)Private sector perspectives on state initiatives

Type of information elicited (3)Public officialsHow hiring and firing decisions are madeHow mission-oriented the body isWhat complaint mechanisms or public consultations existWhat types of problem and risks officials perceive as the worst affecting their organizations

Implementation steps (1)Define objectives, scope, terms of referenceIssue tender for work by local firm/institution Review existing standard questionnaires and adapt to local objectives and conditions, commission review by local experts before questionnaire finalizedDetermine size of sample relative to degree of stratification desired: e.g. by region, sector, size/type of firm, income level; for public officials, level of govt., seniority level, sectors (e.g. health and education); SOEs?

Implementation steps (2) Sample size: usually a minimum of 1000 households, 400 enterprises, 400 officialsPilot in variety of situations (e.g. urban/rural, high income/low income) and review results, discuss quality of results with focus groupsBe prepared to revise radically or abandon if data quality too poorLaunch surveys (face-to-face more effective than mail or telephone) Respondents must feel confident of anonymity if results are to be reliable

Implementation steps (3)Code data, produce statistical transformations, graphsAnalyze and write up for draft reportUsually discuss with focus groups to bring out underlying issues Resources needed ? Depends on local costs, size of survey (was $60,000 in several ECA countries)Time taken: 6-9 months

The power of diagnostic data and key dimensions for analysisUnbundle corruption by type administrative level corruption, capture of the state, bidding, theft of goods and public resources, purchase of licenses and regulationsIdentify both weak institutions (in need of reform) and strong institutions (example of good governance)

The power of diagnostic data and key dimensions for analysis (cont)

Assess the cost of each type of corruption on different social and economic groups Identify key determinants of good governanceHelp to develop policy recommendations The reality of institutional vulnerabilitiesvary greatly from country to countrysome illustrations from diagnostics...

The Bribe Fee List Unofficial Payments by Enterprisesfor Official Licenses and Services, Ukraine and Russia 1996UkraineRussia"Unofficial fee": type of license/"favor"Average "unofficial" fee required for favor$ 176$ 288Enterprise registrationEach visit by fire/health inspector$ 42$ 67Tax inspector (each regular visit)$ 87$ 250Each phone line installation$ 894$ 1,071Lease in state space (sq. meter per month)$ 7$ 26Each export registration/consignment$ 123$ 643Each import registration/consignment$ 278$ 133Domestic currency loan from bank (preferential terms) 4%8%Hard currency loan (preferential terms)4%23%

Romania: Disproportionally Negative Impact on the Poor

Misgoverned vs. well Governed Agencies in Ecuador (as ranked by public officials, 2000 diagnostic)

National vs. Municipal Corruption(based on public officials' responses, a Latin American country, 2001)

Understanding Causal Factors in CE and Governance UnderperformanceIllustrating the extent to which political determinants, meritocracy, transparency, and voice and accountability matters

New Diagnostic Tools permit measuring important dimensions of capacity illustration #1 from Bolivia diagnostics: How Politicized Agencies exhibit Budgetary LeakagesYellow columns depict the unconditional average for each category. Blue line depicts the controlled causal effect from X to Y variables. Dotted red lines depict the confidence ranges around the causal effect depicted by the blue line.

Politicization

High

Moderately High

Moderately Low

Low

20

15

10

5

0

-5

Illustration of empirical analysis based on diagnostic: Users Feedback to Public Agencies Helps Control BriberyBased on 90 national, departmental, and municipal agencies covered in the Bolivia Public Officials Survey.

Chart4

46.2943.45-5-5Low

39.0236.84Moderate_Low

28.5831.16Moderate_High

21.424.8266High

Simple Average Association

Control Causal Link

Margin of Error

Voice / External Accountability

Bribery

all3

all3

45.4946.21-11.288

32.9132.80

23.1620.6811.288

Simple Average Association Between Transparency and Corruption

Controlled Causal Link of Transparency on Corruption

Internal Transparency

Frequency of Bribery

construct3

6.3324.95

35.3633.88

Simple Average Association Between Autonomy and Corruption

Controlled Causal Link of Autonomy on Corruption


all4

38.4736.399

35.533.8357

27.7230.6239

Simple Average Association Between Wages and Corruption

Controlled Causal Link of Wages on Corruption

Wage Satisfaction


construct4

22.3437.1118

43.733.9769

36.3730.4671

Simple Average Association Between Voice and Corruption

Controlled Causal Link of Voice on Corruption

Voice


effect

51.8255.0519

59.6560.1275

70.5365.279

Simple Average Association Between Resources and Service Delivery

Controlled Causal Link of Resources on Service Delivery

Resources

Service Delivery Performance

Sheet2

29.6126.97

36.4931.09

34.9536.33

Simple Average Association Between Politicization and Corruption

Controlled Causal Link of Policitization on Corruption

Politicization


Sheet1

45.4946.21-11.288

32.9132.80

23.1620.6811.288





Sheet6

6.3324.952.4402

35.3633.88-12.9646




38.4736.399-4.2432422

35.533.83570

27.7230.62394.2717278



Wage Satisfaction


5454.572.3904

59.1959.860.1730737705

6865.8-2.3572

Simple Average Association Between Voice and Service Delivery

Controlled Causal Link of Voice on Service Delivery

Voice

Quality of Services

51.8255.05192.18705

59.6560.12750

70.5365.279-2.2975064



Resources


29.6126.973.0212

36.4931.090

34.9536.33-2.2908



Politicization


TransparencyTransparencyControlled Causal Link of Transparency on CorruptionupperlowerSimple Average Association Between Transparency and CorruptiondifferenceMeritocracyControlled Causal Link of Meritocracy on CorruptionupperlowerSimple Average Association Between Meritocracy and Corruptiondifference

Low52.7346.2142.860223487552.617376512545.49-11.2886.8Low53.4138.646636.458637914740.834562085345.49-4.3759241706

Medium64.6432.833.731060142333.400739857732.9102.26Medium63.934.345734.196079146934.495320853132.91-0.2992417062

High75.420.6825.48338612116.03961387923.1611.2886.8High76.7129.093631.433126066426.754073933621.344.6790521327

64.2534.0364.6734.03

-1.190.4234875445-0.410.1943127962

AutonomyAutonomyControlled Causal Link of Autonomy on CorruptionupperlowerSimple Average Association Between Autonomy and Corruptiondifference

Autonomous Agencies124.95216.332.44021.47

Non-autonomous Agencies033.883635.36-12.9646-7.81

62.4633.74

-4.243.1879699248

WageControlled Causal Link of Wages on CorruptionSimple Average Association Between Wages and Corruption

Low21.0136.39939.133748837234.423051162838.47-4.24324222.55617

Medium36.2733.835734.257646511633.805553488435.50

High54.7730.623928.346251162833.056948837227.724.27172782.57333

37.8933.74

-0.18-0.1395348837

VoiceControlled Causal Link of Voice on CorruptionSimple Average Association Between Voice and CorruptionVoiceControlled Causal Link of Voice on Service DeliverySimple Average Association Between Voice and Service Delivery

Low38.5137.111835.599782062838.623817937222.34-3.0240358744Low38.5154.5756.011080327953.5477196721542.39041.44

Medium52.1433.976933.870666816134.083133183943.7-0.2124663677Medium52.1459.8660.454236885260.281163114859.190.1730737705

High67.430.467131.934768161428.999431838636.372.9353363229High67.465.865.428746721367.819853278768-2.3572-1.42

33.7460.79

53.1753.17

-0.23-0.10313901350.410.0840163934

ValuesControlled Causal Link of Values on CorruptionSimple Average Association Between Values and Corruption

Low33.8435.968236.1922228740.1795771336.37-3.9873542601

Medium50.8133.762134.039391928334.526208071734.52-0.4868161435

High67.7331.562531.892904035928.889495964130.283.0034080717

33.74

50.98ResourcesControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service Delivery

-0.13-0.1048387097Low38.3355.051955.952403278753.458796721351.822.187051.3175

Medium51.0660.127560.102174590259.747625409859.650

High63.9965.27964.31714262366.13525737770.53-2.2975064-1.38404

60.79

51.27

0.40.0785854617

PoliticizationControlled Causal Link of Policitization on CorruptionSimple Average Association Between Politicization and Corruption

Low21.9826.9737.696794170444.130605829629.613.02121.82

Medium41.5731.0935.211587443937.604412556136.4900

High57.9236.3333.137410313932.157589686134.95-2.2908-1.38

33.74

40.7

0.340.1176470588

RulesControlled Causal Link of Ill-Specified Rules on CorruptionSimple Average Association Between Ill-Specified Rules and Corruption

Bad53.9840.902533.637242600933.470157399145.330.1670852018

Medium63.233.987532.467584304930.398615695132.942.0689686099

Good73.0726.58531.215466367727.110533632322.594.1049327354

33.74

63.53

-0.75-0.1536885246

00

00

00





00

00




00

00

00



Wage Satisfaction


00

00

00



Voice


00

00

00

Simple Average Association Between Values and Corruption

Controlled Causal Link of Values on Corruption

Voice

Service Delivery

00

00

00



Politicization


00

00

00

Simple Average Association Between Ill-Specified Rules and Corruption

Controlled Causal Link of Ill-Specified Rules on Corruption

Rules


00

00

00



Voice


00

00

00



Resources


00

00

00

Simple Average Association Between Meritocracy and Corruption

Controlled Causal Link of Meritocracy on Corruption

Meritocracy


41.5436.7-4.482

36.434.57

31.832.91

23.530.14.6646



Wage Satisfaction


50.6851.292.72242.7224

56.3258.04

60.9962.7

73.669.85-2.6726-2.6726



Voice

Quality of Services

29.0327.484.4824.482

3332.46

3635.44

3538.72-3.486-3.486



Politicization


6.3324.952.4402

35.3633.88-12.9646




29.0327.4830.95

3332.4632.94

3635.4434.26

3538.7235.78



Politicization


6.3324.9521

35.3633.8836




TransparencyControlled Causal Link of Transparency on CorruptionSimple Average Association Between Transparency and Corruptiondifference

Low49.8348.81-12.05167.26

Moderately Low37.2935.743.13

Moderately High28.9132.672.92

High16.6417.9312.25087.38

WageControlled Causal Link of Wages on CorruptionSimple Average Association Between Wages and CorruptionHigh36.739.54-4.4822.7

Low36.741.54-4.4822.7Moderate_High34.5736.41.6

Moderately Low34.5736.41.6Moderate_Low32.9135.81.54

Moderately High32.9131.81.54Low30.123.54.66462.81

High30.123.54.66462.81

VoiceControlled Causal Link of Voice on Service DeliverySimple Average Association Between Voice and Service Delivery

Low51.2950.682.72241.64



High69.8573.6-2.67261.61


Low27.4829.034.4822.730.95



High38.7235-3.4862.135.78

ResourcesControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service Delivery

Low5452.433.35322.02



High67.5974.04-3.4032.05


Bad045.330

Medium032.940

Good022.590

33.74

0

DIRECT

QualityBribeTransparencyMeritocracyService QualityCorruption

Corruption-0.110.00-0.13-0.11

Meritocracy0.00-0.42-0.010.00-0.41

Transparency0.00-1.140.000.12-1.19

Resources0.400.000.000.000.400.00

Voice0.380.010.140.170.41-0.23

Politicization0.000.12-0.13-0.17-0.040.34

Autonomy0.00-11.33-4.46-4.780.47-4.24

Wage0.00-0.180.000.000.02-0.18

Enforcement0.00-0.010.000.000.00-0.01

Values0.00-0.130.000.000.01-0.13

Rules0.000.00-0.660.00-0.080.75

PerRules0.000.000.000.380.02-0.16

PerRuleControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service DeliveryVoiceControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service DeliveryVoiceControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service DeliveryAutonomyAutonomyControlled Causal Link of Autonomy on CorruptionupperlowerSimple Average Association Between Autonomy and CorruptiondifferenceBudget DiversionControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service Delivery

Low59.8956.572.87181.7359.86Low37.3138.895.0132-3.02Low43.0442.684.482-2.7Autonomous Agencies15.32216.9111.52046.94Low57.556.79-4.8142.9

Moderate_Low62.4359.721.3562.42Moderate_Low47.7249.211.35Moderate_Low50.853.771.35Non-autonomous Agencies011.13611.186.32463.81Moderate_Low54.855.211.48

Moderate_High65.0366.441.4865.03Moderate_High54.7453.561.48Moderate_High57.1258.791.4862.4633.74Moderate_High50.951.181.35

High68.7875.39-3.03781.8368.8High63.962.86-4.8142.9High64.53262.66-4.4822.7High45.2144.825.0132-3.02

Budget DiversionControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service Delivery

Low6162.015.0132-3.02

Rule4Controlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service DeliveryTransparencyControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service DeliveryModerate_Low5656.141.35

Low8.8812.39-1.992-1.2Low45.7340.633.5856-2.16Rule4Controlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service DeliveryModerate_High5251.11.48

Moderate_Low8.2710.981.35Moderate_Low49.547.291.35Low43.4546.29-54.32High4450-4.8142.9

Moderate_High7.846.251.48Moderate_High52.97581.48Moderate_Low36.8439.021.35Simple Average AssociationControlled Causal Link

High7.344.652.2411.35High57.557.7-3.35322.02Moderate_High31.1628.581.48Low13.2814.511.8

High24.8221.464.91Moderately Low12.5111.55

Moderately High9.59.5

High8.96.941.87129.5250.6599526913

7108.51

484144.535

5974

26282742

24182130

111814.56

71410.517

242926.521

7129.54

101311.56Party finance (% of firms)Corruption

1278222013.8251821.527258.44

10714568.414020.535120.13

PoliticiControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service DeliveryControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service Delivery414839444042.435152513357.14

Low57583.43622.073.7167.97711.6229525058.844323.542425.97

Moderate_Low59591.357.1664.9165282628281925.8421327.5104230.52

Moderate_High62621.489.4462.963182430292926302226273036.35

High6564-3.2038-1.9312.0760.57591.3821811129911.863520.524670.78

1478889172018.5201777.27

292432182024.621814.5112124.68

1278557.44442429477.92

131019141414655.54614.29

181659263029.8272724.03

40498212628.8353549.35

1579111411.2131363.64

433040333436424240.26

13106121811.8101072.73

222026141719.8272737.66

353247242733242427.27

201237292524.6202062.99

854665.8111183.77

443737212633292912.34

548596.2449.09

PerRuleControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service DeliveryPerRuleControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service DeliveryPerRuleControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service Delivery

Low59.8956.572.87181.7359.86Low59.8956.572.87181.7359.86Low59.8956.572.87181.7359.86

Moderate_Low62.4359.721.3562.42Moderate_Low62.4359.721.3562.42Moderate_Low62.4359.721.3562.42

Moderate_High65.0366.441.4865.03Moderate_High65.0366.441.4865.03Moderate_High65.0366.441.4865.03

High68.7875.39-3.03781.8368.8High68.7875.39-3.03781.8368.8High68.7875.39-3.03781.8368.8

ValueControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service Delivery

Low36.4741.43-4.4156-2.6659.86

Moderate_Low34.38391.3562.42

Moderate_High33.234311.4865.03

High31.1219.624.2164-2.5468.8

00-1.992

00

00

002.241



Quality of Rules

Budget Diversion

003.58563.5856

00

00

00-3.3532-3.3532


Politicization

Quality of Services

005.01325.0132

00

00

00-4.814-4.814



Voice

Accessibility to the Poor

00

00

00

00



Voice

Poverty Reduction Impact

00

00

00

00





000

000

000

000



Rules in Personnel Management

Meritocracy

002.87182.8718

00

00

00-3.0378-3.0378

&A

Page &P




Meritocracy

002.87182.8718

00

00

00-3.0378-3.0378




Meritocracy

00-5-5

00

00

0066



Voice


002.4402

00-12.9646



Job Purchases

002.87182.8718

00

00

00-3.0378-3.0378




Bribery

00-4.4156

00

00

004.2164



Voice

Bribery

001.6221.622

00

00

001.3821.382


Politicization

Meritocracy

00-5

00

00

006



Quality of Rules


00

00

00

00



Voice


00

00

00

00



Budget Diversion


00

00

00

00



Budget Diversion


001.81.8

00

00

001.81.8


Controlled Causal Link

Transparency

Job Purchase

Simple Average AssociationControlled Causal Linkdifference

Simple Average AssociationControlled Causal LinkdifferenceLow40.6345.73-5

Low48.8149.83-12.0516Moderately Low47.2949.5

Moderately Low35.7437.29Moderately High5652.97

Moderately High32.6728.91High57.757.55

High17.9316.6412.2508

Rule4Controlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service Delivery

Low43.4546.29-5

Moderate_Low36.8439.02

Moderate_High31.1628.58

High24.8221.46

00-12.0516-12.05160

000

000

0012.250812.25080


Control Causal Link

Margin of Error


Bribery

00-5-50

000

000

00550


Control Causal Link

Margin of Error



00-5-50

000

000

00660


Control Causal Link

Margin of Error

Voice / External Acountability

Bribery

DIRECTThru CorruptionThru TransparencyThru Meritocracy

QualityBribeTransparencyMeritocracyQualityBribeTransparencyMeritocracyQualityBribeTransparencyMeritocracyQualityBribeTransparencyMeritocracy

Corruption-0.110.00-0.14-0.110.000.000.000.000.000.000.000.000.000.000.000.00

Meritocracy0.000.40-0.010.00-0.040.00-0.060.000.000.010.00-0.000.000.000.000.00

Transparency0.00-1.170.000.110.130.000.000.130.000.000.000.000.000.000.000.00

Resources0.400.000.000.000.000.000.000.000.000.000.000.000.000.000.000.00

Voice0.380.040.150.18-0.000.00-0.01-0.000.00-0.180.000.000.000.00-0.000.00

Politicization0.000.09-0.14-0.18-0.010.00-0.01-0.010.000.160.000.000.000.000.000.00

Autonomy0.00-12.47-4.80-5.161.370.001.751.370.005.620.000.000.000.000.050.00

Wage0.00-0.170.000.000.020.000.020.020.000.000.000.000.000.000.000.00

Enforcement0.00-0.100.000.000.010.000.010.010.000.000.000.000.000.000.000.00

Values0.00-0.130.000.000.010.000.020.010.000.000.000.000.000.000.000.00

Rules0.000.00-0.650.000.000.000.000.000.000.760.000.000.000.000.000.00

PerRules0.000.000.000.380.000.000.000.000.000.000.000.000.000.00-0.000.00

DIRECTINDIRECTNET

QualityBribeTransparencyMeritocracyQualityBribeTransparencyMeritocracyQualityBribeTransparencyMeritocracy

Corruption-0.110.00-0.14-0.11Corruption0.000.000.000.00Corruption-0.110.00-0.14-0.11

Meritocracy0.000.40-0.010.00Meritocracy-0.040.01-0.06-0.00Meritocracy-0.040.41-0.07-0.00

Transparency0.00-1.170.000.11Transparency0.130.000.000.13Transparency0.13-1.170.000.24

Resources0.400.000.000.00Resources0.000.000.000.00Resources0.400.000.000.00

Voice0.380.040.150.18Voice-0.00-0.18-0.01-0.00Voice0.38-0.140.140.18

Politicization0.000.09-0.14-0.18Politicization-0.010.16-0.01-0.01Politicization-0.010.25-0.15-0.19

Autonomy0.00-12.47-4.80-5.16Autonomy1.375.621.801.37Autonomy1.37-6.85-3.00-3.79

Wage0.00-0.170.000.00Wage0.020.000.020.02Wage0.02-0.170.020.02

Enforcement0.00-0.100.000.00Enforcement0.010.000.010.01Enforcement0.01-0.100.010.01

Values0.00-0.130.000.00Values0.010.000.020.01Values0.01-0.130.020.01

Rules0.000.00-0.650.00Rules0.000.760.000.00Rules0.000.76-0.650.00

PerRules0.000.000.000.38PerRules0.000.00-0.000.00PerRules0.000.00-0.000.38

Corruption0%-1%0%

Meritocracy100%3%85%100%

Transparency100%0%54%

Resources0%

Voice-1%130%-5%-3%

Politicization100%65%7%5%

Autonomy100%-82%-60%-36%

Wage100%0%100%100%

Enforcement100%0%100%100%

Values100%0%100%100%

Rules100%0%

PerRules100%0%

0

Citizen Voice Improves Accessibility of Public Services to the PoorBased on Public Officials Survey. The sample of institutions includes 44 national, departmental, and municipal agencies which are a prior anticipated to be accessible to the poor

Transparency within Government Agencies Prevents Purchase of Public PositionsBased on 90 national, departmental, and municipal agencies covered in the Public Officials Survey.

Chart9

13.2814.511.81.8Low

12.5111.55Moderately Low

9.59.5Moderately High

8.96.941.81.8High


Control Causal Link

Margin of Error


Job Purchase

all3

all3

45.4946.21-11.288

32.9132.80

23.1620.6811.288





construct3

6.3324.95

35.3633.88




all4

38.4736.399

35.533.8357

27.7230.6239



Wage Satisfaction


construct4

22.3437.1118

43.733.9769

36.3730.4671



Voice


effect

51.8255.0519

59.6560.1275

70.5365.279



Resources


Sheet2

29.6126.97

36.4931.09

34.9536.33



Politicization


Sheet1

45.4946.21-11.288

32.9132.80

23.1620.6811.288





Sheet6

6.3324.952.4402

35.3633.88-12.9646




38.4736.399-4.2432422

35.533.83570

27.7230.62394.2717278



Wage Satisfaction


5454.572.3904

59.1959.860.1730737705

6865.8-2.3572



Voice

Quality of Services

51.8255.05192.18705

59.6560.12750

70.5365.279-2.2975064



Resources


29.6126.973.0212

36.4931.090

34.9536.33-2.2908



Politicization


TransparencyTransparencyControlled Causal Link of Transparency on CorruptionupperlowerSimple Average Association Between Transparency and CorruptiondifferenceMeritocracyControlled Causal Link of Meritocracy on CorruptionupperlowerSimple Average Association Between Meritocracy and Corruptiondifference

Low52.7346.2142.860223487552.617376512545.49-11.2886.8Low53.4138.646636.458637914740.834562085345.49-4.3759241706

Medium64.6432.833.731060142333.400739857732.9102.26Medium63.934.345734.196079146934.495320853132.91-0.2992417062

High75.420.6825.48338612116.03961387923.1611.2886.8High76.7129.093631.433126066426.754073933621.344.6790521327

64.2534.0364.6734.03

-1.190.4234875445-0.410.1943127962

AutonomyAutonomyControlled Causal Link of Autonomy on CorruptionupperlowerSimple Average Association Between Autonomy and Corruptiondifference

Autonomous Agencies124.95216.332.44021.47

Non-autonomous Agencies033.883635.36-12.9646-7.81

62.4633.74

-4.243.1879699248

WageControlled Causal Link of Wages on CorruptionSimple Average Association Between Wages and Corruption

Low21.0136.39939.133748837234.423051162838.47-4.24324222.55617

Medium36.2733.835734.257646511633.805553488435.50

High54.7730.623928.346251162833.056948837227.724.27172782.57333

37.8933.74

-0.18-0.1395348837

VoiceControlled Causal Link of Voice on CorruptionSimple Average Association Between Voice and CorruptionVoiceControlled Causal Link of Voice on Service DeliverySimple Average Association Between Voice and Service Delivery

Low38.5137.111835.599782062838.623817937222.34-3.0240358744Low38.5154.5756.011080327953.5477196721542.39041.44

Medium52.1433.976933.870666816134.083133183943.7-0.2124663677Medium52.1459.8660.454236885260.281163114859.190.1730737705

High67.430.467131.934768161428.999431838636.372.9353363229High67.465.865.428746721367.819853278768-2.3572-1.42

33.7460.79

53.1753.17

-0.23-0.10313901350.410.0840163934

ValuesControlled Causal Link of Values on CorruptionSimple Average Association Between Values and Corruption

Low33.8435.968236.1922228740.1795771336.37-3.9873542601

Medium50.8133.762134.039391928334.526208071734.52-0.4868161435

High67.7331.562531.892904035928.889495964130.283.0034080717

33.74

50.98ResourcesControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service Delivery

-0.13-0.1048387097Low38.3355.051955.952403278753.458796721351.822.187051.3175

Medium51.0660.127560.102174590259.747625409859.650

High63.9965.27964.31714262366.13525737770.53-2.2975064-1.38404

60.79

51.27

0.40.0785854617


Low21.9826.9737.696794170444.130605829629.613.02121.82

Medium41.5731.0935.211587443937.604412556136.4900

High57.9236.3333.137410313932.157589686134.95-2.2908-1.38

33.74

40.7

0.340.1176470588


Bad53.9840.902533.637242600933.470157399145.330.1670852018

Medium63.233.987532.467584304930.398615695132.942.0689686099

Good73.0726.58531.215466367727.110533632322.594.1049327354

33.74

63.53

-0.75-0.1536885246

00

00

00





00

00




00

00

00



Wage Satisfaction


00

00

00



Voice


00

00

00

Simple Average Association Between Values and Corruption

Controlled Causal Link of Values on Corruption

Voice

Service Delivery

00

00

00



Politicization


00

00

00

Simple Average Association Between Ill-Specified Rules and Corruption

Controlled Causal Link of Ill-Specified Rules on Corruption

Rules


00

00

00



Voice


00

00

00



Resources


00

00

00

Simple Average Association Between Meritocracy and Corruption

Controlled Causal Link of Meritocracy on Corruption

Meritocracy


41.5436.7-4.482

36.434.57

31.832.91

23.530.14.6646



Wage Satisfaction


50.6851.292.72242.7224

56.3258.04

60.9962.7

73.669.85-2.6726-2.6726



Voice

Quality of Services

29.0327.484.4824.482

3332.46

3635.44

3538.72-3.486-3.486



Politicization


6.3324.952.4402

35.3633.88-12.9646




29.0327.4830.95

3332.4632.94

3635.4434.26

3538.7235.78



Politicization


6.3324.9521

35.3633.8836




TransparencyControlled Causal Link of Transparency on CorruptionSimple Average Association Between Transparency and Corruptiondifference

Low49.8348.81-12.05167.26



High16.6417.9312.25087.38

WageControlled Causal Link of Wages on CorruptionSimple Average Association Between Wages and CorruptionHigh36.739.54-4.4822.7

Low36.741.54-4.4822.7Moderate_High34.5736.41.6

Moderately Low34.5736.41.6Moderate_Low32.9135.81.54

Moderately High32.9131.81.54Low30.123.54.66462.81

High30.123.54.66462.81

VoiceControlled Causal Link of Voice on Service DeliverySimple Average Association Between Voice and Service Delivery

Low51.2950.682.72241.64



High69.8573.6-2.67261.61


Low27.4829.034.4822.730.95



High38.7235-3.4862.135.78

ResourcesControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service Delivery

Low5452.433.35322.02



High67.5974.04-3.4032.05


Bad045.330

Medium032.940

Good022.590

33.74

0

DIRECT

QualityBribeTransparencyMeritocracyService QualityCorruption

Corruption-0.110.00-0.13-0.11

Meritocracy0.00-0.42-0.010.00-0.41

Transparency0.00-1.140.000.12-1.19

Resources0.400.000.000.000.400.00

Voice0.380.010.140.170.41-0.23

Politicization0.000.12-0.13-0.17-0.040.34

Autonomy0.00-11.33-4.46-4.780.47-4.24

Wage0.00-0.180.000.000.02-0.18

Enforcement0.00-0.010.000.000.00-0.01

Values0.00-0.130.000.000.01-0.13

Rules0.000.00-0.660.00-0.080.75

PerRules0.000.000.000.380.02-0.16

PerRuleControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service DeliveryVoiceControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service DeliveryVoiceControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service DeliveryAutonomyAutonomyControlled Causal Link of Autonomy on CorruptionupperlowerSimple Average Association Between Autonomy and CorruptiondifferenceBudget DiversionControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service Delivery

Low59.8956.572.87181.7359.86Low37.3138.895.0132-3.02Low43.0442.684.482-2.7Autonomous Agencies15.32216.9111.52046.94Low57.556.79-4.8142.9

Moderate_Low62.4359.721.3562.42Moderate_Low47.7249.211.35Moderate_Low50.853.771.35Non-autonomous Agencies011.13611.186.32463.81Moderate_Low54.855.211.48

Moderate_High65.0366.441.4865.03Moderate_High54.7453.561.48Moderate_High57.1258.791.4862.4633.74Moderate_High50.951.181.35

High68.7875.39-3.03781.8368.8High63.962.86-4.8142.9High64.53262.66-4.4822.7High45.2144.825.0132-3.02

Budget DiversionControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service Delivery

Low6162.015.0132-3.02

Rule4Controlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service DeliveryTransparencyControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service DeliveryModerate_Low5656.141.35

Low8.8812.39-1.992-1.2Low45.7340.633.5856-2.16Rule4Controlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service DeliveryModerate_High5251.11.48

Moderate_Low8.2710.981.35Moderate_Low49.547.291.35Low43.4546.29-54.32High4450-4.8142.9

Moderate_High7.846.251.48Moderate_High52.97581.48Moderate_Low36.8439.021.35Simple Average AssociationControlled Causal Link

High7.344.652.2411.35High57.557.7-3.35322.02Moderate_High31.1628.581.48Low13.2814.511.8

High24.8221.464.91Moderately Low12.5111.55

Moderately High9.59.5

High8.96.941.87129.5250.6599526913

7108.51

484144.535

5974

26282742

24182130

111814.56

71410.517

242926.521

7129.54

101311.56Party finance (% of firms)Corruption

1278222013.8251821.527258.44

10714568.414020.535120.13

PoliticiControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service DeliveryControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service Delivery414839444042.435152513357.14

Low57583.43622.073.7167.97711.6229525058.844323.542425.97

Moderate_Low59591.357.1664.9165282628281925.8421327.5104230.52

Moderate_High62621.489.4462.963182430292926302226273036.35

High6564-3.2038-1.9312.0760.57591.3821811129911.863520.524670.78

1478889172018.5201777.27

292432182024.621814.5112124.68

1278557.44442429477.92

131019141414655.54614.29

181659263029.8272724.03

40498212628.8353549.35

1579111411.2131363.64

433040333436424240.26

13106121811.8101072.73

222026141719.8272737.66

353247242733242427.27

201237292524.6202062.99

854665.8111183.77

443737212633292912.34

548596.2449.09

PerRuleControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service DeliveryPerRuleControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service DeliveryPerRuleControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service Delivery

Low59.8956.572.87181.7359.86Low59.8956.572.87181.7359.86Low59.8956.572.87181.7359.86

Moderate_Low62.4359.721.3562.42Moderate_Low62.4359.721.3562.42Moderate_Low62.4359.721.3562.42

Moderate_High65.0366.441.4865.03Moderate_High65.0366.441.4865.03Moderate_High65.0366.441.4865.03

High68.7875.39-3.03781.8368.8High68.7875.39-3.03781.8368.8High68.7875.39-3.03781.8368.8

ValueControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service Delivery

Low36.4741.43-4.4156-2.6659.86

Moderate_Low34.38391.3562.42

Moderate_High33.234311.4865.03

High31.1219.624.2164-2.5468.8

00-1.992

00

00

002.241



Quality of Rules

Budget Diversion

003.58563.5856

00

00

00-3.3532-3.3532


Politicization

Quality of Services

005.01325.0132

00

00

00-4.814-4.814



Voice


00

00

00

00



Voice


00

00

00

00





000

000

000

000




Meritocracy

002.87182.8718

00

00

00-3.0378-3.0378

&A

Page &P




Meritocracy

002.87182.8718

00

00

00-3.0378-3.0378




Meritocracy

00-5-5

00

00

0066



Voice


002.4402

00-12.9646



Job Purchases

002.87182.8718

00

00

00-3.0378-3.0378




Bribery

00-4.4156

00

00

004.2164



Voice

Bribery

001.6221.622

00

00

001.3821.382


Politicization

Meritocracy

00-5

00

00

006



Quality of Rules


00

00

00

00



Voice


00

00

00

00



Budget Diversion


00

00

00

00



Budget Diversion


001.81.8

00

00

001.81.8


Controlled Causal Link

Transparency

Job Purchase

Simple Average AssociationControlled Causal LinkdifferenceBudget DiversionControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service Delivery

Simple Average AssociationControlled Causal LinkdifferenceLow40.6345.73-5Low57.556.79-4.814Simple Average AssociationControlled Causal Link

Low48.8149.83-12.0516Moderately Low47.2949.5Moderate_Low54.855.21Low13.2814.511.8

Moderately Low35.7437.29Moderately High5652.97Moderate_High50.951.18Moderately Low12.5111.55

Moderately High32.6728.91High57.757.55High45.2144.825.0132Moderately High9.59.5

High17.9316.6412.2508High8.96.941.8

Rule4Controlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service DeliveryVoiceControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service Delivery

Low43.4546.29-5VoiceControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service DeliveryLow43.0442.684.482Budget DiversionControlled Causal Link of Resources on Service DeliverySimple Average Association Between Resources and Service Delivery

Moderate_Low36.8439.02Low37.3138.895.0132Moderate_Low50.853.77Low6162.015.0132-3.02

Moderate_High31.1628.58Moderate_Low47.7249.21Moderate_High57.1258.79Moderate_Low5656.141.35

High24.8221.46Moderate_High54.7453.56High64.53262.66-4.482Moderate_High5251.11.48

High63.962.86-4.814High4450-4.8142.9

00-12.0516-12.05160

000

000

0012.250812.25080


Control Causal Link

Margin of Error


Bribery

00-5-50

000

000

00550


Control Causal Link

Margin of Error



00-5-50

000

000

00660


Control Causal Link

Margin of Error


Bribery

005.01325.01320

000

000

00-4.814-4.8140


Control Causal Link

Margin of Error



004.4824.4820

000

000

00-4.482-4.4820


Control Causal Link

Margin of Error



00-4.814-4.8140

000

000

005.01325.01320


Control Causal Link

Margin of Error

Budget Diversion


005.01325.01320

000

000

00-4.814-4.8140


Control Causal Link

Margin of Error

Budget Diversion


001.81.80

000

000

001.81.80


Control Causal Link

Margin of Error


Job Purchase

DIRECTThru CorruptionThru TransparencyThru Meritocracy

QualityBribeTransparencyMeritocracyQualityBribeTransparencyMeritocracyQualityBribeTransparencyMeritocracyQualityBribeTransparencyMeritocracy

Corruption-0.110.00-0.14-0.110.000.000.000.000.000.000.000.000.000.000.000.00

Meritocracy0.000.40-0.010.00-0.040.00-0.060.000.000.010.00-0.000.000.000.000.00

Transparency0.00-1.170.000.110.130.000.000.130.000.000.000.000.000.000.000.00

Resources0.400.000.000.000.000.000.000.000.000.000.000.000.000.000.000.00

Voice0.380.040.150.18-0.000.00-0.01-0.000.00-0.180.000.000.000.00-0.000.00

Politicization0.000.09-0.14-0.18-0.010.00-0.01-0.010.000.160.000.000.000.000.000.00

Autonomy0.00-12.47-4.80-5.161.370.001.751.370.005.620.000.000.000.000.050.00

Wage0.00-0.170.000.000.020.000.020.020.000.000.000.000.000.000.000.00

Enforcement0.00-0.100.000.000.010.000.010.010.000.000.000.000.000.000.000.00

Values0.00-0.130.000.000.010.000.020.010.000.000.000.000.000.000.000.00

Rules0.000.00-0.650.000.000.000.000.000.000.760.000.000.000.000.000.00

PerRules0.000.000.000.380.000.000.000.000.000.000.000.000.000.00-0.000.00

DIRECTINDIRECTNET

QualityBribeTransparencyMeritocracyQualityBribeTransparencyMeritocracyQualityBribeTransparencyMeritocracy

Corruption-0.110.00-0.14-0.11Corruption0.000.000.000.00Corruption-0.110.00-0.14-0.11

Meritocracy0.000.40-0.010.00Meritocracy-0.040.01-0.06-0.00Meritocracy-0.040.41-0.07-0.00

Transparency0.00-1.170.000.11Transparency0.130.000.000.13Transparency0.13-1.170.000.24

Resources0.400.000.000.00Resources0.000.000.000.00Resources0.400.000.000.00

Voice0.380.040.150.18Voice-0.00-0.18-0.01-0.00Voice0.38-0.140.140.18

Politicization0.000.09-0.14-0.18Politicization-0.010.16-0.01-0.01Politicization-0.010.25-0.15-0.19

Autonomy0.00-12.47-4.80-5.16Autonomy1.375.621.801.37Autonomy1.37-6.85-3.00-3.79

Wage0.00-0.170.000.00Wage0.020.000.020.02Wage0.02-0.170.020.02

Enforcement0.00-0.100.000.00Enforcement0.010.000.010.01Enforcement0.01-0.100.010.01

Values0.00-0.130.000.00Values0.010.000.020.01Values0.01-0.130.020.01

Rules0.000.00-0.650.00Rules0.000.760.000.00Rules0.000.76-0.650.00

PerRules0.000.000.000.38PerRules0.000.00-0.000.00PerRules0.000.00-0.000.38

Corruption0%-1%0%

Meritocracy100%3%85%100%

Transparency100%0%54%

Resources0%

Voice-1%130%-5%-3%

Politicization100%65%7%5%

Autonomy100%-82%-60%-36%

Wage100%0%100%100%

Enforcement100%0%100%100%

Values100%0%100%100%

Rules100%0%

PerRules100%0%

0

Evidence-Based: it has contributed someInstitutions Matter Enormously but major challenge to identify the how, which, whereDebunked Myths and popular misconceptionsSuggested new approaches and strategic focusDonor rethinking on aid effectiveness; aid allocation; capacity enhancementDe-emotionalize/De-personalize/De-verbosizeDialogue with state leadersNew field of rigorous empirical research -- But still tough tradeoffs within the Bank

The Dividend of Good GovernanceNote: The bars depict the simple correlation between good governance and development outcomes. The line depicts thepredicted value when taking into account the causality effects (Development Dividend) from improved governance to betterdevelopment outcomes. For data and methodological details visit http://www.worldbank.org/wbi/governance.

Annual GDP Growth (%)Transparency, Parliaments, Corporate Ethics, and GDP GrowthSource: Annual GDP growth over 1999-2001 WDI 2002; GDP is computed in PPP terms. The various transparency / governance variables drawn from Executive Opinion Survey, 2002.

No Evidence to support some popular notionsConstant drafting of new A-C laws/regulationsCreating many new Commissions & AgenciesBlaming GlobalizationBlaming (or stopping) PrivatizationCultural Relativism (Corruption is culturally-determined)Blaming History or Regional Characteristicsby contrast, what may be particularly important (cont)

In sum, strategies that can workTransparency Mechanisms (e*governance, data)Democratic Accountability & Collective Action (Judcry, Legislative, Exec, Private, CS)Judicial Independence (& good rule of law institutions)Budgetary Reforms & Meritocracy in Public SectorAddressing the challenge of State CaptureDecrease Regulatory Burden on FirmsFocus on Prevention & IncentivesPolitical Finance ReformPrivate Firms, Multinationals, Corporate Ethics IFI, G-7, OECD Responsibility (Global Compact)

Challenges for us at WBIScaling up in some key dimensions, across all activities: Evidence-based activities: from 4% to 25% in a year, then to 50% in 2 years? [& lessening PCC]Action Program/Action Plan content: from 9% to 20% in a year, then to one-third in 2 years?Substantive Institution-Building Content: %%Mainstreaming Governance in thematic learningEvidence-based input to ROC/OC/CASes [++]The Web as central toolSubstantive/tough input to Bank policy formulationOECD, G-7, UN, NATO, WEF [non-governance..]

Data for Analysis and informing Policy Advise, not for Precise RankingsData in this presentation is from aggregate governance indicators, surveys, and expert polls and is subject to a margin of error. It is not intended for precise comparative rankings across countries, but to illustrate performance measures to assist in drawing implications for strategy. It does not reflect official views on rankings by the World Bank or its Board of Directors. Errors are responsibility of the author(s), who benefited in this work from collaboration with many Bank staff and outside experts. www.worldbank.org/wbi/governance

All indices are constructed using data from public officials surveys of various countries. We used the same technique as in the Bolivia paper (factor analysis). The resulting indices are scaled from 0 to 100.Key point: the surveys not only reveal the incidence and extent of corruption, but allow us to examine the direct costs to different groups in society. This research demonstrates the highly unequal impact of so-called "gratuity payments" in Romania. Though they are often seen as a quasi-market pricing mechanism, they have an impact on the poor's access to health services.33Tax Burden, Tax Evasion and Bribery go Hand in Hand

Enterprises perceive the tax regime as being very anti-competitive in ex-Soviet economies and other countries. Their perceived tax burden is the outcome of more than the statutory tax rates themselves: the ineffective and often arbitrary administration of the tax regime (and frequent penaltyand concomitant harassment decisions) matters more significantly than the (scheduled) tax rate itself.

Further, the overall tax burden on enterprise of the administration of the tax regime, tax evasion, and bribery are all found to go hand in hand.

Key point: the surveys not only reveal the incidence and extent of corruption, but allow us to examine the direct costs to different groups in society. This research demonstrates the highly unequal impact of so-called "gratuity payments" in Romania. Though they are often seen as a quasi-market pricing mechanism, they have an impact on the poor's access to health services.

Documents

1 Capacity Enhancement, Governance, and Evidence-Based Diagnostics and Assessments Background handout for discussion at