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XXV Villa Mondragone International Economic Seminar,
University of Rome Tor Vergata, June 25-27, 2013
Francesca Recanatini Leader, AC Thematic Group
World Bank
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Useful Definitions
The manner in which the state acquires
and exercises its authority to provide
public goods & services
Use of public office for private gain
Governance
Corruption
•Corruption is an outcome – a consequence of weak or bad governance •Governance reform helps combat corruption by addressing its underlying causes
2
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In practice, a heterogeneous challenge ◦ Different country’s reality (political, institutional and cultural)
◦ Different forms of corruption
◦ Different level of skills and resources
It involves diverse actors and stakeholders (local, national and international)
It requires a significant re-allocation of powers and rents within the country
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Need to design a strategy that: focuses on incentives
is “country” specific and pragmatic
allows to monitor progress and to adjust to new circumstances
includes both short term and medium term measures
fosters and sustains coordination and collaboration among different actors
promotes local capacity building (citizens, civil servants and youth)
Heterogeneity
Sustainability
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A participatory process to identify governance challenges and build local capacity
Key features: ◦ Medium/long term partnership between multiple
actors for design and implementation ◦ Mechanism to facilitate feedback from different
stakeholders (focus groups) ◦ Multiple sources of data (from households, firms
and public officials) focused on experience ◦ Rigorous technical implementation ◦ Local institution implements ◦ Focus on monitoring results and impact
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0% 15% 30% 45% 60% 75% 90%
% of public officials
reporting frequent
public funds mis-
management
% of public officials
reporting frequent
purchase of positions
in their institutions
% citizens reporting
bribes used frequently
to obtain public
services
Sierra Leone(2003) Guatemala(2004) Zambia(2003)
Paraguay(2005) Mozambique(2004) Madagascar(2005)
Country Diagnostic Results
Extent of corruption, (Selected Countries ‘03-’05)
0
2
4
6
8
10
12
14
16
18
Ecu
ador
(200
0)
Guat
emal
a(20
04)
Hon
duras(
2001
)
Par
aguay
(200
5)
Per
u(200
1)
Guin
ea(2
004)
Ghan
a(20
00)
Sierr
a Leo
ne(2
003)
Zam
bia(2
003)
Moz
ambi
que(20
04)
Small
Medium
Large
Confidential
Corruption imposes barriers to households to
access basic services, Sierra Leone 2003
Cost of Corruption:
discouraged users by service
0% 5% 10% 15% 20% 25%
Municipal and District Councils
Public education services
Public health services
Sierra Leone Roads Transport
Authority (RTA)
Sierra Leone Housing Corporation
(SALHOC)
Proportion of head of households reporting that they decide to not conduct procedures with these
institutions because they couldn't pay the unofficial costs
Sierra Leone Housing Corporation
0% 10% 20% 30%
high income
middle income
low income
0% 10% 20% 30%
Sierra Leone Roads Transport Authority
0 10 20 30 40 50 60 70 80 90
Min. of DefenceMin. of Development
Min. of InformationNat. Commissions
OthersPara-statals
Min. of FinanceMin. of Local Govt.
Min. of Social WelfareMin. of Education
Min. of JusticeS.L Police
Min. of AgricultureMin. of Health
% of Public Officials that said irregularities/(misappropriations) are frequent
Public funds are mismanaged by agency (as reported by Public Officials, Sierra Leone, 2003)
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What are the likely outcomes? ◦ Unbundled evaluation of corruption –
administrative, state capture, bidding, theft of public resources, purchase of licenses, nepotism
◦ Identification of weak and strong institutions
◦ Assessment of the impact and costs of corruption on different stakeholders
To what extent has this approach helped shape public sector reforms? ◦ Only when paired with political will, donor
coordination and (true) medium term vision
Lessons learnt
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What are the advantages and disadvantages of this approach? ◦ Pros: Greater local capacity, consensus and ownership
that can ensure sustainability of reform process; “south-south” knowledge sharing (Costa Rica, Zambia, Mozambique, Haiti)
◦ Cons: Time consuming and costly; challenging to coordinate many different actors, especially international ones; unforeseen political changes
How do we “reconcile” aggregate indicators with
national assessments?
◦ Two sides of the same coin with different objectives.
Key => the two approaches complement each other
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Using responses from public officials
Public officials are employees of each agency
Public official’s responses are re-scale (from 0 to 100) and then aggregated by agency using factor analysis technique
0 always meaning the lowest level of quality of governance, corruption, access or service performance
South North East West SIERRA
Prov. Prov. Prov. Area LEONE
Overall corruption 22 32 35 33 32
Corruption in budget 35 43 48 39 40
Corruption in public contracts 18 35 29 33 30
Corruption in personnel 39 44 55 53 49
Accessibility for poor 85 74 87 74 78
Audit Mechanisms 55 59 66 58 58
Enforcement of rules 70 67 80 73 71
Politicization 21 34 22 34 32
Quality of rules 62 62 70 61 63
Resources 54 51 47 55 52
Transparency 51 55 53 51 55
Citizen voice 70 59 65 66 66
Meritocracy 66 65 70 69 68
Governance and corruption indicators by province
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Audit
Mechanisms
Enforcement of
Rules
Quality of
RulesPoliticization Resources Transparency
Citizen
Voice
Wage
SatisfactionService
State
Capture
Overall
Corruption
Ministère de la justice 63 51 55 44 37 47 72 19 67 44 39
Ministère de la Sécurité 62 50 57 44 38 47 74 18 69 38 35
Ministère de l’Administration et de la Décentralisation 61 53 54 42 39 49 75 29 70 45 45
Ministère des Finances 76 72 60 40 43 58 80 28 67 51 30
Ministère de l’Enseignement Supérieurs et Recherche
Scientifique62 50 56 44 35 46 74 20 69 47 42
Ministère de l’Urbanisme et Habitat 76 42 33 64 75 38 5
Ministère de la Santé Publique 70 63 57 43 35 60 70 30 58 40 44
Service Communal 62 51 34 40 52 64 13 49 49
Service Sous Préfectoral 58 43 55 45 32 43 72 13 64 52 37
Ministère de la Communication 52 61 44 38 46 75 42 65 69
Ministère de la Jeunesse et Sports 60 52 56 42 42 53 73 11 71 52 42
Ligue Islamique Nationale 62 60 59 41 41 49 75 28 64 43 33
Ministère de l’Agriculture 61 58 57 42 38 45 77 30 65 36 36
Ministère de l’enseignement Pré Universitaire 67 69 57 41 50 50 72 42 76 45 31
Ministère de la Fonction Publique 44 60 45 44 44 71 25 56 10
Organisation Non Gouvernementale (ONG) 59 53 41 48 44 82 8 70 54
Entreprise Micro – Finance 32 73 8 80 13
Ministère de l’Energie, Mines et Environnement 70 49 55 52 25 74
Whole Country 62 50 57 45 34 46 75 20 68 42 37
The indicators above take values between 0-100. To interpret them please keep in mind that:
-The higher the value of the governance indicator the better the quality of that dimension .
-The higher the value of the corruption index, the more severe the problem.
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Legal and
Regulatory
Corruption
Corruption
in
Personnel
Corruption
in Budget
Administrative
Corruption
Corruption in
Public
Procurement
AUDIT -0.09 -0.14 -0.36 -0.14 -0.14
(0.048)* (0.055)*** (0.061)*** (0.056)** (0.055)**
MERIT -0.15 -0.33 -0.10 -0.19 -0.09
(0.040)*** (0.045)*** (0.051)** (0.046)*** (0.045)**
OPENNESS -0.11 -0.02 -0.25 -0.17 -0.15
(0.054)** (0.062) (0.069)*** (0.063)*** (0.061)**
Observations 928 928 928 928 928
Adjusted R-
squared
0.847 0.889 0.876 0.897 0.914
Weighted SUR regressions with regional Fixed Effects
Standard errors in parentheses * significant at 10%; **
significant at 5%; *** significant at 1%
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2SLS OLS
Total Corruption Total Corruption
Internal Organization -1.4603 -0.5767
(0.7649)* (0.0419)***
Obs. 909 915
First Stage
Regression
Internal Organization
Average Internal
Organization
0.2237
(0.1279)*
Obs. 909
Weighted SUR regressions with regional Fixed Effects
Standard errors in parentheses * significant at 10%; **
significant at 5%; *** significant at 1%
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Governance and Anti-corruption: www.worldbank.org/anticorruption
Anti-Corruption Authorities Portal: www.acauthorities.org World Bank Public Sector Group:
http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPUBLICSECTORANDGOVERNANCE/0,,menuPK:286310~pagePK:149018~piPK:149093~theSitePK:286305,00.html
Governance Diagnostic Surveys Country Sites: http://go.worldbank.org/P8PT8AK4P0
Actionable Governance Indicators Website: ◦ www.agidata.info (internal) ◦ www.agidata.org (external)
Additional material available upon request:
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Institutional structure of the sectors under study ◦ How does transport work in Mauritania? What needs to happen at the
implementation level?
Possible vulnerabilities ◦ Internal to the sector: transporters, officials and regulations. External to the
sector: linked to banking sector? International issues?
Mechanisms of poor governance ◦ Is it difficult to get a trucking license? Are bribes required to cross borders
with freight? Do civil servants have necessary capacity? Are rules clear?
Costs of poor governance ◦ What price do transporters and customers pay to ‘facilitate’ antiquated or
inadequate processes? What is the mark up on contracts due to fraud? How many roads are narrower than they should be because of corruption?
Who are the major players and what are their policy needs? ◦ Potential entry points for reform? Who plays a role in the reform process?
Who can be a potential deal breaker? How can we understand the political landscape to ensure policy outcomes are politically viable?
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Sector Level Governance Assessment
Tools & Info
Desk Study: history,
sector structure, current context
In-Depth Interviews
3 Surveys (Experience Based)
Audit & Project Data
Cross-Sector Team
(PREM, WBI, SDV,PDS, Procurement)
Country Ownership Political Economy Assessment
Team Capacity Needs
Transparent Process
Local Partnership Gov’t + Civil Society
Donor Partnership w/Active Donors
Partnership w/ Bank Country Team
Broad Peer Review
Process Needs
Outcomes:
1. Governance Baseline
2. Agency Specific Indicators
3. Public Dissemination &
Participatory Policy Process
Iterative process: 8-12 months
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Sector-specific focus: ◦ Apply methodology and solutions to country and sector realities
Mixed methods: ◦ Focus groups & In-depth Interviews
◦ Surveys (households, businesses & civil servants)
◦ Desk study
◦ Project cost data
Active participation of civil society and government to
contribute to policy making process.
Close collaboration with donors’ colleagues.
Active links to on-going sector projects ◦ WB transport and port projects
◦ EU transport ministry aid project