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Anti-Corruption Programmes in Post-Communist Transition Countries and Changes in the Business Environment, 1999-2002
Abstract
This paper analyses the anti-corruption activities of 24 transition countries in the period 1999-2002. These activities are divided into omnibus anti-corruption programmes, legislative reform aimed at tackling corruption, and adherence to international anti-corruption conventions. The paper presents a new measure for determining the extent of anti- corruption activity undertaken in these three categories during 1999- 2002. Using the results of a large survey of firms across the region, the paper shows that countries with low levels of administrative corruption were more likely to adopt intensive anti-corruption programmes than countries with high levels of administrative corruption, independent of the level of state capture Across the transition countries, omnibus anti-corruption programmes and membership in international anti-corruption conventions have not led to reductions in the level of either administrative corruption or state capture – at least in this relatively short time period – while new or amended laws aimed at tackling corruption have led to reductions in administrative corruption, but not in levels of state capture. Finally, the paper finds that perceptions of corruption – measured in terms of the degree to which firms consider corruption to be an obstacle to the operation and growth of their business – are positively correlated with the intensity of anti-corruption programmes. This finding suggests that by launching high-profile anti-corruption initiatives, governments may be more likely to heighten managers’ perceptions of the problem rather than to reduce the impact of corruption on firms.
... The support of NIS operation is furnished by the national anti-corruption strategies, whose assessment imposes an important effort data collection, analysis, integration, and interpretation of information. Matei and Matei (2011) identify multiple models used by previous studies in assessing the anti-corruption strategies, which are deployed by others (Andrei, et al., 2009) using models developed by the World Bank (Huther, Shah, 2000), and the European Bank for Reconstruction and Development (Steves, Rousso, 2003). In this study, we are going to deploy what we call Steves-Rousso-Matei's dynamic model to assess the anti-corruption strategies in two stages. ...
... In terms of operationalization, each matrix has a single value for the whole period of time, and this is why this technique is a static procedure. As a result, the Steves and Rousso (2003) model is based on the static anti-corruption matrix (Appendix 1), where the evaluated anti-corruption activities are divided in three general categories as follows: ...
... As presented in Appendix 1, these three major components of the OI are weighted equally. Steves and Rousso (2003) considered not only a formal consignment of the activities mentioned but also some aspects concerning their design, content, and operationalization. Thus, for each criterion, there are sub-criteria as delineated in Appendix 1. ...
... The support of NIS operation is furnished by the national anti-corruption strategies, whose assessment imposes an important effort data collection, analysis, integration, and interpretation of information. Matei and Matei (2011) identify multiple models used by previous studies in assessing the anti-corruption strategies, which are deployed by others (Andrei, et al., 2009) using models developed by the World Bank (Huther, Shah, 2000), and the European Bank for Reconstruction and Development (Steves, Rousso, 2003). In this study, we are going to deploy what we call Steves-Rousso-Matei's dynamic model to assess the anti-corruption strategies in two stages. ...
... In terms of operationalization, each matrix has a single value for the whole period of time, and this is why this technique is a static procedure. As a result, the Steves and Rousso (2003) model is based on the static anti-corruption matrix (Appendix 1), where the evaluated anti-corruption activities are divided in three general categories as follows: ...
... As presented in Appendix 1, these three major components of the OI are weighted equally. Steves and Rousso (2003) considered not only a formal consignment of the activities mentioned but also some aspects concerning their design, content, and operationalization. Thus, for each criterion, there are sub-criteria as delineated in Appendix 1. ...
The last three decades have witnessed a proliferation of studies on the globalization of corruption or convergence of anticorruption strategies. These studies have been motivated by scholarly concerns from various administrative, economic, and political fields. In view of these interdisciplinary concerns, the purpose of this article is to provide a comparative analysis of corruption phenomena and the demand for public integrity because these developments pertain to the discourse on globalization issues in some South-Eastern European nations within the last decade. The article concludes that the differences observed in these countries are due to their level of maturation in the democratic processes, their stages in the European Union integration process, and the geopolitical condition of each nation, and offers a palatable public policy prescription for achieving a lasting impact in the region.
Keywords: anti-corruption; corruption; globalization; South-Eastern European states; public integrity.
... Rather than simply relying on popular institutional measures, such as reforming civil servants' salary levels, improving government transparency (Cordis and Warren 2014), or screening and meritocratic recruiting (Gans-Morse et al. 2018;Maor 2004), which generally require good institutional environments and longer term efforts, political leaders may exploit their political mandate to launch new policy initiatives to clean up corruption in intensive, short-term bursts. Such harsh crackdowns are often meant to signal the government's anticorruption commitment (Steves and Rousso 2003). For example, after assuming office, it is common for the Mexican President to spur intensive anticorruption campaigns to bolster political support (Morris and Klesner 2010). ...
... For instance, Ni and Sun (2015) using data of one province in China found that more anticorruption efforts did not reduce the preexisting high corruption perception of the local residents. Steves and Rousso (2003) even found a significantly positive correlation between anticorruption activities and perceptions of corruption in transitional post-Soviet countries. Research has also shown that higher levels of perceived corruption reduce political trust, especially fiduciary trust in the public sector (Anderson and Tverdova 2003;Thomas 1998): corruption is seen as a betrayal of people's normative expectations of public administration (K. ...
Governments at times combat corruption intensively in an attempt to (re)gain political trust. While corruption crackdowns may demonstrate government resolve to fight corruption, the high-profile corruption uncovered may also shock the public. Therefore, how effective can anticorruption policies help boost political trust? We argue that anticorruption policies influence political trust through two channels: direct experience, that is, interactions with governmental bodies, and the media, that is, second-hand information culled from reporting on anticorruption. Differentiating between these two channels illustrates that anticorruption policies may have distinct effects on political trust for different social groups. We contextualize our theoretical framework with the latest anticorruption drive in China, combining longitudinal data from a national survey and field interviews and using difference-in-differences (DID) models. Our findings support our predictions. For state-system insiders (e.g., civil servants), increase of political trust is less pronounced than for outsiders because the former directly experience radical implementation processes and ineffective anticorruption outcomes. Similarly, political trust increases at a lower rate for groups with higher levels of education and greater access to information outside governmental propaganda than for their less-informed counterparts. Intensive anticorruption efforts are therefore more likely to increase political trust for the grassroots than for elites in China.
... So far our review shows a prevalence of studies based on cross-sectional studies using ordinary least square multiple regression analyses, such as the one of Yongqiang (2011) estimating the effect of a government intervention on Chinese firms' bribery, the one of Treisman (2000) studying the impact of political decentralization on perceived corruption, and the study of Steves and Rousso (2003) focusing on the relationship between anti-corruption programmes and the level of administrative corruption. ...
... Steves, F. and Rousso, A. (2003). Anti-corruption programmes in post-communist transition countries and changes in the business environment, 1999-2002. ...
... Corruption and state capture are two important aspects of the irregular economy that have been studied rather extensively, although conclusions are still tentative. Based on the data supplied by the BEEPS surveys in 1999 and 2002, Steves and Rousso (2003) analyse the anti-corruption activities of 24 transformation countries in the period 1999-2002, including SEE countries. These activities are divided into omnibus anti-corruption programmes, legislative reform aimed at tackling corruption, and adherence to international anti-corruption conventions. ...
... Anti-Corruption Activity Indices, 1999 * Central and eastern Europe and the Baltic states ** Commonwealth of Independent States Source:Steves and Rousso (2003), p. 9 ...
... – The below presentation follows closely the study of Steves – Rousso (2003); based on the main conclusions from the first and second BEEPS rounds, they have conceptualised and coded " a matrix of anti-corruption activities " (Steves and Rousso, 2003, 5). Those activities are divided in three general categories, as follows: omnibus reform programmes; new legislation targeted at anti-corruption; accession to international covenants and membership in international anticorruption coalitions. ...
... In sub chapter II.2.3., we presented the Steves-Rousso model for assessing the anticorruption strategies, model based on anti-corruption matrix. The analysis presented by Steves and Rousso (2003) referred to former communist states in transition and it covered the time horizon: 1999-2002. The quantification of activities in matrix had a single value for the whole period of time, determining us to consider this method as a static one. ...
The preoccupations about conceiving and promoting efficient anti-corruption strategies exist in most states, especially in the developing countries. The opportunity of such strategies derives from the direct link, demonstrated theoretically and empirically, between the effects of the anti-corruption strategies and government performance, translated both in the economic and social results and living standard, welfare etc. In the last decades, the transnational actors - UN, World Bank, OECD, EU etc. - have affirmed as promoters of own anti-corruption strategies, directing the states’ efforts, conferring adequate levels of relevance, effectiveness, efficiency or sustainability. The South-Eastern European states incorporate own anti-corruption strategies in the framework of general strategies, aiming the government reform in the context of the European integration process. Strengthening the public integrity, reducing corruption, developing a genuine climate of economic freedom become important objectives concerning the impact on government performance. The paper incorporates briefly the main characteristics of anti-corruption strategies, developed by transnational actors and it aims to shape theoretical and empirical frameworks for the impact of anti-corruption strategies. The focus on some South-Eastern European states has a demonstrative character, as the presented analyses may be extended to various geo-political areas.
... – The below presentation follows closely the study of Steves – Rousso (2003); based on the main conclusions from the first and second BEEPS rounds, they have conceptualised and coded " a matrix of anti-corruption activities " (Steves and Rousso, 2003, 5). Those activities are divided in three general categories, as follows: omnibus reform programmes; new legislation targeted at anti-corruption; accession to international covenants and membership in international anticorruption coalitions. ...
... In sub chapter II.2.3., we presented the Steves-Rousso model for assessing the anticorruption strategies, model based on anti-corruption matrix. The analysis presented by Steves and Rousso (2003) referred to former communist states in transition and it covered the time horizon: 1999-2002. The quantification of activities in matrix had a single value for the whole period of time, determining us to consider this method as a static one. ...
The preoccupations about conceiving and promoting efficient anti-corruption strategies exist in most states, especially in the developing countries. The opportunity of such strategies derives from the direct link, demonstrated theoretically and empirically, between the effects of the anti-corruption strategies and government performance, translated both in the economic and social results and living standard, welfare etc. In the last decades, the transnational actors – UN, World Bank, OECD, EU etc. - have affirmed as promoters of own anti-corruption strategies, directing the states’ efforts, conferring adequate levels of relevance, effectiveness, efficiency or sustainability. The South-Eastern European states incorporate own anti-corruption strategies in the framework of general strategies, aiming the government reform in the context of the European integration process. Strengthening the public integrity, reducing corruption, developing a genuine climate of economic freedom become important objectives concerning the impact on government performance. The paper incorporates briefly the main characteristics of anti-corruption strategies, developed by transnational actors and it aims to shape theoretical and empirical frameworks for the impact of anti-corruption strategies. The focus on some South-Eastern European states has a demonstrative character, as the presented analyses may be extended to various geo-political areas.
... Stocktaking studies and new indices were just about to bring out evidence about persisting corruption in many postcommunist countries (e.g. OSI, 2002; Steves and Rousso, 2004), 16 which could substantiate earlier arguments that 'anticorruption and antipatronage ... rules and measures that were adopted in Eastern Europe were half-hearted at best' (Sajó, 1998 ). In CEE, this stood in contrast to the initial hopes, and corresponding assessments, that the prospects of EU accession would lead to significant improvements regarding anti-corruption measures. ...
... Comparative studies on the numerous anticorruption efforts actually undertaken in various post-communist countries are still rare (e.g. Michael, 2005a; Steves and Rousso, 2004). Also the role of civil society in anti-corruption has recently received some more comprehensive discussion by international organisations (United Nations, 2004a; OECD, 2003), which go beyond mere declarative statements or the self-representation of TI as part of global civil society available during the 1990s. ...
This review assesses the anti-corruption literature in a first attempt to identify systematically significant trends so far and challenges remaining to future political science research. Research on anti-corruption is a young métier.While reflecting on the field at large, the review focuses on two issues that have been central to its development: the role of post-communist Eastern Europe and of civil society involvement. Organised in a chronological way, the review distinguishes and discusses four phases, in order to trace how scholars have addressed these two issues in the context of a rapid evolution of anti-corruption debates, ongoing transformations in Eastern Europe and increasing insight into the controversial matter of anti-corruption efforts. It considers four crucial periods: (1) earlier scholarly debates on corruption (pre-1990s); (2) initial anti-corruption debates (1990s); (3) a period of reorientation (early 2000s); and (4) latest anti-corruption debates (mid-2000s). Changing perspectives on anti-corruption in relation to post-communism and civil society involvement are discussed for each of the four phases in order to delineate the different research trajectories. This leads to the conclusion that future research, while addressing the theory deficit, needs to take account of increasingly complex conceptual challenges posed by the (interrelated) changes in international and domestic governance.
... 6 Fifth, a number of academics and practitioners started producing critiques and direct empirical evidence that the former procurement model of anti-corruption work failed to reduce corruption. Steves and Rousso (2003) in regression analysis of anti-corruption work in Eastern Europe and the Former Soviet Union failed to find any statistically significant effects of anticorruption work on reductions in corruption; while authors like de Samson (2005) show that anti-corruption work is often no more than a "spectacle." Figure 7: Key Events in the Evolution of the Anti-Corruption Industry (1997-2009 ...
... Bulgaria and Romania are included in the New Member State group even if they accessed to the EU only in 2007. However, Steves and Rousso (2003) and Budak and Goel (2006) show that for transition economies a near-term prospect to access EU has a positive effect on corruption fighting. On the other hand we left Croatia in the SEE states group as it only accessed in 2013. ...
... This implies that countries with high level of corruption will find it more difficult to overcome this specific problem. Then again there is evidence that the level of state capture does not influence the adoption of anticorruption programmes (Steves and Rousso, 2003). ...
We investigate the drivers of firm level productivity in catching-up economies by jointly estimating its relationship to innovation and competition using data from the EBRD-WB Business Environment and Enterprise Performance Survey (BEEPS) in Eastern Europe and Central Asia. The findings confirm an inverted-U shaped impact of competition on R&D. Both competition and innovation have a simultaneous positive effect on labour productivity in terms of either sales or value added per employee, as does a high share of university graduates and foreign ownership. Further positive impacts come from firm size, exports, or population density. Innovation and foreign ownership appear to be the strongest drivers of multifactor productivity.
... A policy will not be effective unless it catalyses significant cultural and social change. Thus, corruption in transition countries cannot be erased solely by good advice from foreign experts, strict sanctions or short-term activities (USAID, 1999; Steves and Rousso, 2003), but requires a coherent strategy, a fixing of clear objectives, and a firm, longterm government commitment (Pope, 2000; DAC, 2003; Gilman and Stout, 2005). ...
Representations of Nicaragua’s political health during the Alemán administration (1997–2001) were highly polarised. On the one hand, the period saw considerable inflows of international funds destined for governance reforms, the introduction of a range of anti-corruption measures and detailed governmental treatises and proclamations on how Nicaragua was becoming more transparent (e.g. Alemán, 1999). Nevertheless, at the same time, critical commentators (e.g. Envio, 1999: 7) lamented a continuing decline in integrity recorded in surveys of popular and business opinion (although the validity of such sources is of course open to debate).2 At the time, there was little more than an increasing weight of accusation and a decline in Nicaragua’s position, then 77th out of 91 on Transparency International’s (TI’s) corruption perception index (TI, 2001) to support claims of endemic corruption in Nicaragua. The administration of Enrique Bolaños (2001–2007), however, subsequently unearthed the extent of the corruption of his predecessor.3 The reality was that, despite the evolution of internationally-funded anti-corruption programmes, the extent of corrupt personal enrichment and political manipulation that had occurred under the Alemán administration was extreme even for Nicaragua.
... studies have begun to change that by systematically collecting information on anticorruption measures in transition countries. Steves and Rousso (2003), focusing on the period from 1999 to 2002, collected information on the adoption of laws in transition countries addressing freedom of information, civil service, political party finance, anti-money laundering, and so forth, as well as details on anticorruption strategies and status with regard to international conventions. They found that the adoption of laws was associated with declines in many forms of corruption, although adoption of an anticorruption strategy (without targeted legislative components) was not significantly associated with changes in corruption between 1999 and 2002. ...
https://openknowledge.worldbank.org/handle/10986/7089
This is the third in a series of World Bank studies that examines patterns and trends in corruption in business-government interactions in the transition countries of Europe and Central Asia. The message of this series is positive: Corruption has fallen since 2000 in many transition countries in the region. Firms are paying bribes less frequently and in smaller amounts (as a share of revenues) than in the past, and they see corruption as less of a problem for business. Reforms have accelerated in the past decade. Many countries are cutting red tape, simplifying taxes, and strengthening audits. These reforms are translating into lower levels of corruption in areas such as tax and customs administration, business licensing, and inspections. While the impetus for reforms and their design and implementation vary across countries, the link between reform and results is unmistakable. There is no room for complacency, however. Corruption is not falling in all countries or all sectors, and even the most successful reformers still tend to have higher levels of firm-level corruption than in Western Europe. The burden weighs most heavily on the new private firms that are the engine of growth and employment in the region. And even in countries that are showing success, the gains are not irreversible. Leaders need to continue to open their economic and political systems to greater competition, foster transparency and accountability in the public sector, and reduce administrative and regulatory burdens for firms.
... This implies that countries with high level of corruption will find it more difficult to overcome this specific problem. Then again there is evidence that the level of state capture does not influence the adoption of anticorruption programmes (Steves and Rousso, 2003). ...
This paper provides a survey of the effects of market competition in the transition economies of Eastern Europe and Central Asia. The pivotal element of the transition was inter-firm competition, which replaced economic planning as the method to identify demand. Pro-competitive policies that facilitated the transition are discussed, including international trade, attracting foreign direct investment and firm entry. Research topics with respect to competition changed as the transition advanced. The focus shifted from churn and macroeconomic shock-management in the initial phases toward firm entry, privatisation and restructuring of incumbents. In the later phases of transition, differentials in aggregate economic performance became obvious, pointing at institutional differences and their interplay with transitions. These are equally reflected by the degree of competition of the business environment. Also the methods changed with the evolution of the research agenda. Early case studies were displaced by large-scale, cross-country econometric studies as survey data became increasingly available.
... Yet others suggest that some positive eff ects of administrative reform should be felt early after adoption. Studying the intensity of anticorruption policy measures in the postcommunist world, Steves and Rousso (2003) fi nd that in the period from 1999 to 2002, when most of the new civil service laws were adopted, bribery and kickbacks in the administrations decreased. Using 2005 data from the World Bank, Anderson and Gray (2006) also conclude that the introduction of institutional change, including reinforcing meritocracy in the civil service, helped reduce corruption in a relatively short time. ...
Practitioners and scholars of postcommunist politics disagree on the accomplishments of administrative reforms in new Eastern European democracies. The transformation of the public sector after 1989 has aimed to consolidate the democratic process and enhance economic development. Skeptics, however, argue that administrative reforms face serious challenges in the context of economic liberalization, insufficient capacity for modernization, and cultural legacies of the past. The authors judge reform effectiveness by testing the impact of civil service reform on government transparency and foreign direct investment. The results of the empirical analysis confirm that once reform is adopted, administrations become more effective at reducing corruption and attracting investment. Despite the delays and difficulties of implementation, the adoption of reform is important in and of itself, and countries can expect positive results sooner than skeptics predict.
... It has been suggested that access-toinformation legislation may be "a tool that can be used to gain accountability" in government (Piotrowski, 2007, p. 10); for, in theory, public use of access-to-information legislation leads to holding government accountable for its actions (Birkinshaw, 2010). Further, the United Nations and other intergovernmental organizations have advanced protocols, initiatives, and conventions linking access to information and freedom of expression as deterrents to corruption (African Union, 2003;Asian Development Bank, 2004;Southern African Development Community, 2001;Steves & Rousso, 2003; 2 Horizontal accountability would be the internal checks and balances within government that provide oversight of government activity (O'Donnell, 1998;United Nations Development Program, 2010, p. 9). Vertical accountability has been referred to as the way in which political and public leaders have their decisions and activities monitored by the public, including news media, civil society, and individual citizens (Diamond & Morlino, 2004;Goetz & Jenkins, 2005;Wampler, 2004). ...
... A carrot-stick approach has been used by supranational financial institutions, intergovernmental organizations, and donor nations when offering development aid or improved trade status to governments in exchange for agreements of adopting transparency policies, such as ATI legislation. The institutions have become one of a host of measurements used to evaluate a country's movement toward curbing corruption (Asian Development Bank, 2004;Horsley, 2004;Steves & Rousso, 2003;Stiglitz, 2002Stiglitz, , 2003U.S. State Department, 2002). ...
Government corruption and secrecy are not new phenomena in Africa; however, international scrutiny has grown as nations end decades of conflict and seek to develop, donor nations consider providing more aid, and investors and transnational corporations look to the area for oil and other resources. Given that corrupt government activities account for millions of dollars diverted from public coffers each year in developing nations and lead to unfair benefit distribution to citizens, the chapter examines the global network of actors attempting to advance the international norm of government accountability to constrain corruption through advocating for the adoption of access-to-information legislation. The chapter also explores the relationship between perception of corruption in Africa and four political institutions of vertical accountability. The findings indicate that perception of corruption is inversely correlated with news media rights, civil liberties, and political rights. However, adopting access-to-information legislation or planning to adopt the law was not correlated with the perception of corruption.
... The largely negative finding of a study of reform efforts in Eastern and Central Europe provides support for my approach (Steves and Rousso 2003). The WB and the EBRD carried out surveys of businesses in that region in 1999 and 2002. ...
All political systems need to mediate the relationship between private wealth and public power. Those that fail risk a dysfunctional government captured by wealthy interests. Corruption is one symptom of such failure with private willingness-to-pay trumping public goals. Private individuals and business firms pay to get routine services and to get to the head of the bureaucratic queue. They pay to limit their taxes, avoid costly regulations, obtain contracts at inflated prices, and get concessions and privatized firms at low prices. If corruption is endemic, public officials, both bureaucrats and elected officials, may redesign programs and propose public projects with few public benefits and many opportunities for private profit. Of course, corruption, in the sense of bribes, payoffs and kickbacks, is only one type of government failure. Efforts to promote "good governance" must be broader than anti-corruption campaigns. Governments may be honest but inefficient because no one has an incentive to work productively, and narrow elites may capture the state and exert excess influence on policy. Bribery might induce the lazy to work hard and permit those not in the inner circle of cronies to obtain benefits. However, even in such cases, corruption cannot be confined to "functional" areas. It will be a temptation whenever private benefits are positive. It may be a reasonable response to a harsh reality, but, over time, it can facilitate a spiral into an even worse situation.
... I do not have a good explanation for the remaining variation. Steves and Rousso (2003) used the BEEPS survey to study the effectiveness of government anti-corruption programs in these countries during 1999-2002, and found little evidence that such measures could explain the variation. They found, first, that anti-corruption programs were more likely to be adopted where they were "needed least"-in countries with the lowest levels of administrative corruption. ...
... As shown, at the start, these bodies were generally not empowered with investigative powers but were involved in building partnerships with civil society groups, and prepared comprehensive anti-corruption strategies, action plans, etc (the " preventive and coordinative " model). These commissions were an essential element of a specific approach to the fight against corruption dubbed by the European Bank for Reconstruction and Development (EBRD) " omnibus programmes " [9]. Initially, these bodies had a positive overall effect in raising public awareness concerning the issue of corruption. ...
This article explores the reasons for the introduction of anticorruption agencies of a specific type in Eastern Europe. It is argued that one of the important functions of these agencies—which are stronger on information gathering, coordination and strategy rather than on investigation of concrete cases—is to give to the government some leverage over the anticorruption discourse. Presenting the anticorruption commissions and agencies as (discourse-controlling) instruments gives an answer to the troubling question why governing parties are at all interested in the introduction of such bodies. Apart from instrumentalization in political discourse, anticorruption bodies in Eastern Europe have had other effects as well. As shown in the Baltic case, institutional engineering provides for a brief window of opportunity during which political forces committed to integrity could gain the upper hand. The problem in Eastern Europe, however, is not the lack of such windows of opportunities—it is more the lack of really committed political forces capable of continuous and consistent anticorruption effort.
... Due to its disastrous economical and social consequences fighting corruption has become the main question on agenda of countries in transition. Steves and Rousso (2003) paper analyses the anticorruption activities of 24 of the 27 transition countries in the period 1999-2002. Using the results of a large survey of firms across the region, the paper shows that countries with low levels of administrative corruption were more likely to adopt intensive anti-corruption programmes than countries with high levels of administrative corruption, independent of the level of state capture. ...
Numerous studies have found negative connection between corruption level and economic development. At the same time few of them demonstrate correlation between women representation in politics and corruption level. This paper analyzes correlation between gender and corruption for a specific sample of countries, sharing common cultural and historical legacy – transition countries. Relationship between higher number of women in parliament and decreasing level of corruption is supported by data. Relations with other forms of women social activity were found to be insignificant. Contribution of this paper to the research literature on this topic is twofold. First analysis on gender and corruption in transition economies has previously not been done. Second, this study could also be used for the practical policies on fighting corruption by application of gender quotas.
... 6 Fifth, a number of academics and practitioners started producing critiques and direct empirical evidence that the former procurement model of anti-corruption work failed to reduce corruption. Steves and Rousso (2003) in regression analysis of anti-corruption work in Eastern Europe and the Former Soviet Union failed to find any statistically significant effects of anticorruption work on reductions in corruption; while authors like de Samson (2005) show that anti-corruption work is often no more than a "spectacle." Figure 7: Key Events in the Evolution of the Anti-Corruption Industry (1997-2009 ...
Work on anti-corruption has changed significantly in the mid-1990s -- reflecting a "third wave" of anti-corruption work. If the first and second waves of anti-corruption work reflected the marketisation of anti-corruption projects, the third wave reflects the direct cross-border co-operation between law enforcement agencies (particularly in the European Union). The first part of this paper reviews the literature and the data we consulted in our (rather informal) study. The second part traces the evolution of the anti-corruption industry across time - showing the beginning of each new wave as a "structural break" in the organisational structure of project delivery. The observation of such structural breaks provides an objective criteria for determining when a new wave began - independently of the observer. The third part of the paper reviews the economics of the anti-corruption industry through each of these waves. The fourth section provides tentative observations for other donors and participants in the anti-corruption industry - such as UNDP, the World Bank, NGOs and consulting companies - on lessons from the European Union. This paper unabashedly uses New Institutional Economics as a framework for explaining the interaction of donors, countries, consulting companies and consultants in contributing to the three "structural breaks" in the organisation of the anti-corruption industry during the last 20 years.
... Lorsque cet effet domine trop fortement celui de la réputation individuelle (Andrianova, 2001) – ou lorsque, en l'absence de réputation individuelle, il devient trop important (Tirole, 1996) – la réputation collective peut alors conduire des agents qui, dans d'autres circonstances mais face aux même incitations, auraient choisi l'honnêteté à accepter la corruption. Ainsi, lorsqu'une économie est fortement ancrée dans la corruption, c'est non seulement les comportements contemporains mais également la réputation collective que les mesures de lutte contre la corruption doivent combattre (Lui, 1986 ). Cet argument milite donc en faveur de thérapies de choc et peut participer à expliquer le succès mitigé de nombreux plans de lutte contre la corruption dans les économies où elle est très largement répandue (Steves & Rousso, 2003). 15 Le second mécanisme exploite les développements récents de la littérature sur les fondations psychologiques des comportements économiques (Fehr & Schmidt, 2002 ; Tirole, 2002). ...
Du point de vue de l'analyse économique, la corruption tire ses spécificités de l'imbrication de deux contrats aux objectifs divergents. La corruption est définie comme un accord illégal, ou pacte de corruption, liant un agent à un corrupteur et destiné à organiser le détournement d'un pouvoir discrétionnaire. Ce pouvoir discrétionnaire est hérité, par l'agent, d'un contrat de délégation conclut avec un principal. A partir de cette définition "contractuelle” des situations de corruption, la revue de la littérature proposée ici articule les développements récents de l'analyse microéconomique de la corruption aux propriétés des relations bilatérales entre les joueurs.
... Due to its disastrous economical and social consequences fighting corruption has become the main question on agenda of countries in transition. Steves and Rousso (2003) paper analyses the anticorruption activities of 24 of the 27 transition countries in the period 1999-2002. Using the results of a large survey of firms across the region, the paper shows that countries with low levels of administrative corruption were more likely to adopt intensive anti-corruption programmes than countries with high levels of administrative corruption, independent of the level of state capture. ...
This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent policy instruments and reviews their effects on R&D and economic growth. This part also discusses the distortionary effects and distributional consequences of IPR protection as well as empirical evidence on the effects of patent rights. Then, the second part considers the international aspects of IPR protection. In summary, this paper draws the following conclusions from the literature. Firstly, different patent policy instruments have different effects on R&D and growth. Secondly, there is empirical evidence supporting a positive relationship between IPR protection and innovation, but the evidence is stronger for developed countries than for developing countries. Thirdly, the optimal level of IPR protection should tradeoff the social benefits of enhanced innovation against the social costs of multiple distortions and income inequality. Finally, in an open economy, achieving the globally optimal level of protection requires an international coordination (rather than the harmonization) of IPR protection.
... Politicians pay lip service to the fight against corruption, but they fail to clamp down on corruption to break the vicious circle of poverty and graft. Corruption seems a self-sustaining phenomenon, since anti-corruption measures tend to be adopted where they are needed least: in countries that do not have particularly serious corruption problems (Steves and Rousso, 2003, p. 28). Transition countries with low levels of administrative corruption have been more likely to adopt intensive anti-corruption programs than countries with high levels of administrative corruption. ...
This paper addresses the run up to the recent European Union enlargement. It considers the accession of 10 Eastern European countries in view of the pre-existing economic conditions. The paper also raises the question how the new member states can tackle their deficit problems. In particular, the paper pays attention to the question at what point the emphasis should be placed on cutting expenditure rather than raising revenues. Furthermore, the paper addresses tax capacity and tax effort in the new member states. Finally, the paper looks at possible negative relationships between corruption and tax effort on the one hand and corruption and foreign direct investments on the other.
Eastern European post-communist countries inherited pervasive corruption after the breakup of the USSR. Public trust was the crucial factor in tackling corruption and democracy building in these countries. This article takes Armenia as a case to study the antecedents and evolution of trust in Eastern European post-communist countries that went through a government coup in the 21st century. By comparing the corruption situation in Armenia before and after the Velvet Revolution 2018, we scrutinise how trust was and is critical to combating corruption and democracy building. We argue that in transition governments, one can distinguish two sources of creating public trust. The first wave generates when the government is newly established, and people trust the leader and his persona. Arguably, in this stage, the level of trust generated is based on expectations. The second wave of trust comes with the government’s actual performance, measured partly based on corruption perception.
By analysing anti-corruption literature on Russia published since the fall of the Soviet Union, this paper compares the domestic and external production of knowledge and explains how the former reflects the particular academic and political context of the country. In fact, these studies are characterized by a focus on legal and technical issues and by a dearth of empirical research. The result is a static and unvaried literature that isolates itself from the international debate on anti-corruption, missing the opportunity to contribute to global scholarship, but that also reflects the difficulty for researchers of conducting independent research in Russia. Comparing domestic and external works, this article explains how they have evolved differently, failing to establish a dialogue and a collaboration, and provides further evidence of the barriers to overcome to strengthen the Russian production of knowledge, especially in the social sciences.
Executive summary/Abstract
Background
In spite of the large number of anti‐corruption reforms implemented in different countries, there has been little research that empirically and systematically assesses the impact of these efforts.
Objectives
The main objective of this review is to identify what works in curbing corruption in the public sector, by meta‐analyzing the findings of published and unpublished evaluations of different types of anti‐corruption interventions in different countries. The focus of this review is administrative corruption, namely corrupt acts involving civil servants in their dealings with their superiors, during the implementation of public policies, or while interacting with the public for service delivery. Political corruption (in the adoption of laws, regulations, and policies), and private‐to‐private corruption (involving only private actors) are excluded from this review.
Search methods
The literature search was conducted by querying three widely recognized electronic databases: RePEc, SSRN, and Web of Science. These databases are considered the most comprehensive in the socio‐economic field of research. The main grey literature repositories were also queried. Both published and unpublished studies were searched on the basis of specific combinations of keywords. The terms used to define queries were based on the “types of corruption”, “types of interventions/policies/reforms” and “study design” search strings. Specific conventions were used to “explode” or “truncate” keywords as appropriate. Screening of the references (i.e., snowballing) of the identified studies was also performed, and a reverse snowballing approach on Google Scholar was used. In order to ensure replicability, all searches were stored into Covidence, an online software developed by the Cochrane community for screening studies and extracting data for systematic reviews.
Selection criteria
Any study that included experimental evaluations (randomized controlled trials) of interventions developed for use in the public sector (e.g., public administration, education, health, etc.) to curb administrative corruption has been included in this review without any geographical or temporal limitations. Only studies written in or translated into English have been considered.
Data collection and analysis
Two review authors read the titles and abstracts of identified studies in order to determine their eligibility against the inclusion/exclusion criteria. When a title or abstract could not be included or rejected with certainty, the full text of the article was reviewed. In case of disagreement about whether or not a study should be included, the lead author (Giulia Mugellini), together with Martin Killias acted as arbitrator. The relevant information from identified studies was extracted independently by two review authors, following the guidelines of the Campbell Collaboration. The studies were assessed using the Cochrane Risk of Bias checklist as a basis.
The effect size selected for the analysis was the Fisher's z‐score transformation of the partial correlation coefficient. For the meta‐analysis, random effect(s) models were estimated. Meta‐regression analysis models were then used to investigate the determinants behind the observed between‐ and within‐study heterogeneity. Ten different covariates were included in the meta‐regression models in order to control for the type of intervention, the type of corruption, the level of national income, the quality of the study and the type of participants involved in laboratory experiments.
Results
The initial literature search led to the identification of 70 studies. Approximately one‐third of the studies were excluded at the title/abstract stage because they either did not evaluate any anti‐corruption intervention but simply assessed the relationship between corruption and other phenomena, or because the study design was not based on randomized controlled trials. Another 14 studies were excluded only after a full‐text assessment. At this stage, the main reasons for exclusion were related to an unsuitable type of corruption (e.g., when the focus of the paper was political corruption, or private‐to‐private corruption instead of administrative corruption), the lack of regression output, or an unsuitable study design. At the end of the selection process, 29 studies resulted as eligible for inclusion.
All the selected studies were written in English. The publication years ranged from 2007 to 2018. The majority of the selected studies (20) investigates the effect of anti‐corruption interventions in high‐ and upper‐middle income countries (Austria, Brazil, Canada, China, Germany, Italy, Mexico, the Netherlands, Thailand, the United Kingdom, and the United States). Nine studies focused on low‐ and low‐middle income countries (Burkina Faso, Burundi, Ethiopia, India, Indonesia, Pakistan, Tanzania, and Uganda). All of them were randomized experiments. Twenty‐five of these experiments were conducted in a laboratory, while four of them were field experiments.
As to the type of outcome, the majority (18) of the selected studies addressed bribery (either active or passive), while 11 studies considered misappropriation of public resources (embezzlement). In terms of anti‐corruption interventions, 19 studies tested the effect of deterrence interventions, while 10 studies focused on policies based on organizational and cultural change.
Overall, the meta‐analysis’ findings indicate that the identified interventions decrease the level of corruption. Results are statistically significant (p < 0.01) and robust to different heterogeneity estimators—that is, (restricted) maximum likelihood and method of moment estimators. The observed high level of heterogeneity— I 2 is equal to 92.36%, of which 43.78% is due to between‐study heterogeneity and 48.57% to within‐study heterogeneity—albeit in line with other meta‐analyses in economics, suggests the need for meta‐regression analyses.
To investigate the determinants behind the between‐ and within‐study heterogeneity of the observed effect, both a random effect model and a multilevel model were adopted.
The results of the multilevel model show that:
1) Control and deterrence interventions are more effective than organizational and cultural reforms in reducing corruption in the public sector.
2) Combining different interventions reduces corruption more than single interventions.
3) Interventions are more effective in preventing misappropriation of public resources (embezzlement) than passive or active bribery.
Finally, the Funnel Asymmetry Test (FAT), conducted with both additive and multiplicative dispersion terms, shows no evidence of a strong publication bias in the literature.
Authors’ conclusions
The results of this systematic review, based on a combination of laboratory and field experiments, demonstrate that increasing the expected monetary costs (e.g., sanctions) of corruption or the probability of detection (e.g., audit risk) is more effective than organizational, cultural and educational interventions in curbing administrative corruption, at least in the short term. However, this result might be due to the fact that the majority of selected studies are based on lab‐experiments, where the assessment of the intervention is almost concurrent to its development. Short‐term evaluations might fail to identify the effect of organizational and cultural interventions. Indeed, these interventions are based on structural changes in the organization of the system and the ethical and cultural education of public officials and might, thus, entail long periods to display their results on the level of corruption. Nevertheless, a combination of different interventions proves to be more effective than single interventions. For example, policies guaranteeing impunity to officials or citizens who report corrupt practices (principal witness/leniency treatment) are more effective if associated with a high probability of audit than leniency alone. A low probability of detection can be compensated by the threat of high fines in reducing both the amount and the likelihood of bribe demands. To the contrary, a high probability of detection had no effect in the absence of severe sanction threats.
The importance of the organizational and cultural environment in which the intervention is implemented clearly emerged in the literature. When possible, the characteristics of the settings where the interventions were developed were included in the meta‐regression analysis (such as the level of income of the countries). When it was not possible to measure contextual factors and their interaction with the main intervention, a qualitative analysis was performed to reveal the complexities of these interactions.
This additional analysis shows that the impact of the interventions was found to be affected by the likelihood of the continued interactions between bribe takers and givers, the amount and probability of fines, and the size of the bribe, among others. For example, reporting mechanisms and leniency policies increase their potential in combination with interventions that limit agent's exposure to one another – such as staff rotation. The success of audit risk on corruption is strongly dependent on the seriousness of the potential sanction and the probability that a sanction is applied. Some differences also emerge between high‐ and low‐corruption countries regarding the effectiveness of anti‐corruption interventions. For example, measures tending to increase social blame of corrupt practices work in low‐corruption countries. Adding punishments in environments where actors’ behavior is tightly monitored increases compliance, but more so in environments where corruption is the exception rather than the rule.
In terms of implications for research, the fact that control and deterrence turns out to be more effective than organizational and cultural interventions in curbing administrative corruption confirms the importance of economic theories (and cost‐benefit analysis). However, the meta‐analysis also demonstrates the effectiveness of combining different types of interventions.
This is true not only when combining policies reinforcing control and deterrence (monitoring frequency, detection probability and amount of fines), but also when policies based on organizational and cultural change are added (e.g., staff rotation and leniency). In particular, the role of moral levers in preventing corruption emerges, and especially the importance of strengthening professional identity and values in order to avoid conflicts between an individual's private interests and his/her public role. These results highlight the importance of going beyond economic models for explaining corruption, and considering the moral and cultural mechanisms underlying this phenomenon.
It also emerges the need to understand how different forms of corruption operate in practice at macro‐ (cross‐country), meso‐ (country/nation‐state) and micro‐ (individual) level. In particular, individual‐level factors, such as the strive for power, low self‐control, loss aversion and risk acceptance would need to be addressed.
It would be interesting to distinguish, when more experimental studies will be available, between top‐down (from supervisors to officials) and bottom‐up (from citizens to officials) interventions.
From a methodological point of view, it could be tested whether the results change according to the types of games used as a basis for the corruption experiments (e.g., behavioral game theory, trust game, etc.) and according to the setting in which the experiment was conducted (e.g., context‐free versus in‐context presentation of experimental tasks).
Considering the effect of sensitization messages in reducing bribery demand, we would encourage researchers to develop other corruption experiments that explore the impact of interventions in fostering professional self‐identity, as well as the impact of organizational family culture on corruption. Furthermore, this review highlights the need for a comprehensive classification of anti‐corruption policies that distinguishes interventions by type of corruption, risk factors, type of policy tool and administrative sector.
The aim of the paper is to review the Lisbon criteria that are influencing business in Lithuania, and to outline the main perspectives of national businesses in the EU context. To this end, we have analyzed earlier works on the factors and parameters that influence business environment in the EU, compiled a list of most crucial factors influencing the business entities, interviewed the top management of 300 top Lithuanian companies in order to find out the peculiarities of the Lithuanian way to success in business. Managers’ opinions were compared to facts stated in internal documents (especially documents containing market requirements) as to quality and price; internal costs and efficiency of processes. The following methods of research were employed: metaanalysis, documentation review, triangulation, interviews, basic methods of mathematical statistics.
The article discusses the Gorilla case, an officially still-contested partial state capture by a single local oligarchic group, in line with the (partial) Elite Cartels corruption pattern in Slovakia. Due to the manner in which evidence, although considered unofficial, was made available, this case illustrates secret political and business processes during partial state capture. The initial absence of the case in public, political, and academic discourses, suggests that state capture can be present and operate undetected for a long time. This study also shows that in-depth analysis of the Gorilla case was avoided by both domestic and international political scientists, despite its paramount practical and theoretical importance. This, in turn, reflects a methodological capture of political science. Consequently, this article disentangles the complexities of the Gorilla case and lays down the foundation for further studies. Specifically, it highlights the need for more careful research, terminological precision in both theory-building and empirical findings on state and media capture based on case studies, as well as re-assessment of the methodology of political sciences used in these research areas.
The overall economic aim of transformation in South East Europe (SEE) over the last 20 years has been to support sustained economic growth. This required states to ensure conditions for the pursuit of freedom and the creation of innovating institutions, organizations and structures. Local development should have played a central role in this, on its own merit and in consideration of the centralized nature of the pre-transformation economic system.
Standard economics has supposed for a long time that the economy is coordinated by the price mechanism and that no explicit governance problem is involved. However, Coase has proven that this description is only partial, Berle and Means have stressed that ownership and control of firms are often separated, and later on Williamson has demonstrated that hierarchies play a fundamental role. Coase’s path-breaking contribution has been the starting point of a burgeoning literature on the nature of the firm. This literature splits the problem into two parts that concern first, the firm boundaries and their determination, and, second and given those boundaries, the way in which the different constituents of the firm are coordinated and the residual income or residual decision-making power (given incomplete or missing contracts) is allocated.
This chapter reviews corruption and anti-corruption policies in post-communist countries since the beginning of transition by reviewing authors who have identified corrupt characteristics specific to the post-communist countries (Mendras, 1998; Andreff, 2003; Satarov and Parkhomenko, 2001). As a group, the post-communist countries are considered among the most corrupt in the world. Indeed, according to Transparency International (2005), seven transition countries are in the 30 most corrupt of 159 countries in the index. The historical legacy of communism, the history of transition, and the adaptation of networks into modern clientelism emerge as powerful conditioning experiences in the types of corruption which emerge, with two conceptual types appearing as particularly salient: state capture or political corruption, and administrative corruption (Hellman, Kaufman and Jones, 2000; 2002). Using measurement and diagnostic tools from major donors, the World Bank (WB), Transparency International (TI), Political Risk Services and the European Bank for Reconstruction and Development (EBRD) the chapter then uses the prevalence of these corruption types to create a comparative typology of measurable corruption within the post-communist Eastern European countries. However, by using donor diagnostics this standardising methodology ultimately occludes a more diverse, historical and contextual picture.
This chapter outlines the main similarities and differences between the Armenian and Georgian systems of corruption after Soviet rule. Both Armenia and Georgia inherited from Soviet times a centralized system of corruption. The communist leadership in both countries closely controlled their subordinates. The question arises why the Shevardnadze government lost this level of authority, whereas the post-Soviet governments in Armenia did not. A closer look at how both countries transitioned from Soviet rule provides some answers. Yet how can we know without engaging in tautological reasoning that Armenia’s system of corruption is more centralized than the Georgian one? I begin by addressing this question.
Located at the crossroad between Christianity and Islam, somewhere between Asia and Europe, Armenia and Georgia share similar historical traits. Both frequently suffered from the aspirations of regional powers. Mongols, Persians, Arabs, and Turks invaded the South Caucasus for centuries. In the last 150 years, it was Tsarist and later Soviet Russia that subjugated the Armenian and Georgian peoples. Both nations were able to preserve their strong sense of nationhood mainly due to their distinct languages with their unique alphabets and the strong influence of their respective churches, the oldest Christian communities in the world, dating back to the 4th century. It is therefore not surprising that with the advent of glasnost Armenians and Georgians expressed a strong thirst for independence.
The last two chapters demonstrated that Armenia and Georgia like many other post-Soviet countries have inherited systemic corruption from Soviet rule. Due to the different nature of their political transitions, Armenia and Georgia’s systems of corruption have developed in different directions. In contrast to Armenia’s highly centralized system of corruption, the Georgian government under Shevardnadze largely failed to arrive at a shared agreement to curb corruption among its ministers and limit state officials’ illicit activities. In this chapter, I argue that the type of systemic corruption has made a difference for Armenia and Georgia’s political and economic development. It has largely done so in ways that were hypothesized in Chapter 1 (see Table 1.1).
The aim of this paper is to analyze and compare investment trends and investment policies in the countries of the following three transition regions: South East Europe, South Caucasus and Central Asia. The analyses and comparisons were conducted in view of the impacts that the progress achieved in transition, economic development, as well as the energy reserves of countries in these three regions have on their investment policies and investment trends. Rezime: Cilj ovog rada je da analizira i uporedi investicione tokove i investicione politike zemalja tri regiona u tranziciji: jugoistočne Evrope, južnog Kavkaza i centralne Azije. Ove analize i poređenja su urađeni sa aspekta uticaja napretka u procesu tranzicije, ekonomskog razvoja, kao i energetskog bogatstva zemalja ova tri regiona na njihovu investicionu politiku i investicione tokove.
Anticorruption programmes, projects and campaigns have come to constitute an essential aspect of furthering good governance over the last two decades. This article provides a conceptual framework for studying anticorruption efforts and it assesses their nature and impacts across Eastern Europe by focusing on the interplay between the international and domestic domains. More precisely, it differentiates between domestic social movements, governmental political machines and international legal mechanisms. These three levels of analysis - domestic civil society, national governments and international society - provide a meaningful general basis for comparing a variety of anticorruption efforts. On all three levels, political and material interests of relevant actors are complemented by normative arguments. In assessing the case studies in this volume, this article concludes that, at the interfaces of the three levels, coincidental and spontaneous breakthroughs have largely outweighed systematic implementation of appropriate anticorruption strategies. It further stresses that broad societal support for anticorruption remains essential for the success of any international or governmental initiatives.
Corruption is still a serious problem in Lithuania as well as in the majority of new European states. It reveals itself not only through regular internal corruption scandals, but is also exposed in various international surveys, such as Transparency International’s Corruption Perception Index (CPI), or the World Bank’s Business Environment and Enterprise Performance Survey (BEEPS). In recent years, the European Commission in its annual reports on the progress achieved by candidate countries in the process of European integration expressed concern about the inefficiency of the real anti-corruption policy in all those states.
Investment Climate and Foreign Direct Investment Trends in the South Caucasus and Central Asia
This paper analyzes and compares investment climates and trends in the South Caucasus and Central Asia. The analyses and comparisons were conducted in view of the impacts of transitional progress, economic development, and the energy reserves from these regions on the inflow of foreign direct investment. Improvement of the investment climate by accelerating the transition process and reducing investment risks can be seen as the most important determinants of FDI inflows into the countries of these two regions. Structural diversification of South Caucasian and Central Asian natural resource-based economies would be essential in ending dependence on the energy and mining sectors and would have positive long-term effects on economic growth and the investment climate, and attract other, additional types of FDI.
In 2007, both Moldovan and Ukrainian authorities took firm steps to reduce corruption along the Transdnistrian border. This
paper—aimed mainly at anti-corruption practitioners and scholars in public administration—discusses the background and underlying
principles guiding the anti-corruption work being adopted by both governments in order to facilitate discussion about optimal
anti-corruption programme design. This paper presents a set of tools used during the planning phase of the anti-corruption
programme—outlining the methodology used to assess the extent of corruption on the Transdnistrian border, the problems of
legislative transplants, a “contract test” for defining corruption offenses, a method of risk analysis, and a model of optimal
anti-corruption programme organizational design.
What are the lessons from anti-corruption programmes in Customs agencies over the last 20 years? The data suggest that many of the usual activities -- like codes of conduct and posters do not work. Internal inspectorates, and particularly internal audit, has a large effect on reducing corruption. A review of the literature and best practice presented.
The European Union has not defined its limits in geographical terms. Each enlargement has led and will lead to a decrease of the European Union’s per capita GDP. After the collapse of the Soviet Union the transition countries went through a long and deep recession. However, they have reached a stage of positive growth and their tax levels are approaching the lower limit of the range of tax/GDP ratios in European Union countries. Differences exist in tax capacity and tax effort. In some countries greater efforts are possible to improve tax revenues. Further examination of the timing of tax administration reform may shed light on tax effort in transition countries. The paper also suggests the existence of a negative relationship between tax effort and corruption.
Regional cooperation is of outmost importance, both for the southeastern European countries that want to set themselves on the European mainstream, and for the EU. In the last few years, the fight against corruption has been high on the agenda of all the governments in the CEE countries. The regional initiatives have provided the opportunity to exchange not only best, but also “worst practices” in this field, contributing to the development of anticorruption programs and to the improvement of the situation in these countries. The paper seeks to present the Romanian experience in regional initiatives, particularly in the Stability pact Anticorruption – Initiative.
The anti-corruption successes of Singapore and Hong Kong have encouraged the establishment of strong, centralized anti-corruption agencies across the globe. This study charts the emergence of anti-corruption agencies (ACAs), and then examines recent experiences with these bodies in developing countries. We propose a set of criteria for assessing and explaining their performance. The analysis applies within strict limits to those countries that have established the minimum political, legal, and socio-economic conditions for effective governance. Where these conditions are in place, success is possible. However, ACAs in poor and badly governed states are generally ineffective, if not actively harmful.
This paper provides an overview and discusses key findings of the 2002 Business Environment and Enterprise Performance Survey (BEEPS), implemented jointly by the EBRD and the World Bank. (The first round of the BEEPS was implemented in 1999.) Four important conclusions arise from the analysis. First, qualitative measures of the business environment in the BEEPS appear to provide reasonably accurate measures, both across various business environment dimensions and countries and over time. These qualitative measures are compared with both objective statistical measures, where possible, and quantitative business environment measures from the BEEPS. Second, qualitative measures of the business environment show that in virtually all transition economies the business environment has improved significantly between 1999 and 2002. Third, the analysis of quantitative measures of the business environment shows a strong association between business obstacles, added costs and constraints on business, such as corruption, private security protection or obstacles, added costs and constraints on business, such as corruption, private security protection or reliance on internal sources of finance. However, evidence suggests that the nature of corruption in tax administration, which tends to be centralised, is less costly to firms than is corruption in business regulation, which is decentralised. Fourth, the analysis of firm investment and growth shows that the quality of the business environment in 1999 (based on qualitative measures) is significantly and positively associated with investment by firms in the period 1999 to 2001. It also shows that state capture significantly boosts the investment and real revenue growth rates of firms that engage in this activity, but holds back the growth performance of other firms.
The issue of corruption has come to center stage. The economic consequences of pervasive corruption, and recent trends toward democratization, have increased the pressure for accountability and transparency from those in public office. This paper does not suggest that there are any easy solutions or models that can be applied in the fight against corruption; nor does it suggest that any country has yet designed an ideal model, or indeed, that such an ideal model exists. What this paper does argue is that while each country or region is unique in its own history and culture, its political systems, and its stage of economic and social development, similarities do exist and that experience and lessons are often transferable. A “national integrity system ” is proposed as a comprehensive method of fighting corruption. It comprises eight pillars (public awareness, public anti-corruption strategies, public participation, “watchdog ” agencies, the judiciary, the media, the private sector, and international cooperation) which are interdependent. Establishing and strengthening such an integrity system requires identifying opportunities for reinforcing and utilizing each of these pillars in the fight against corruption. EDI Working Papers are intended to provide an informal means for the preliminary dissemination of ideas within the World Bank and among EDI’s partner institutions and others interested in development issues. Copies are available from:
Islam explores the link between information flows and governance or institutional quality. Economic theory expounds on the importance of information on economic outcomes either through its direct effect on prices and quantities or through its effect on other factors such as institutions and the quality of governance. She shows that countries with better information flows also govern better. Two kinds of indicators are used to assess better information flows. One index is based on the existence of freedom of information laws. A second index called the "transparency" index measures the frequency with which economic data are published in countries around the world. Empirical analysis shows that countries which have better information flows as measured by both indicators have better quality governance. This paper - a product of the Poverty Reduction and Economic Management Division, World Bank Institute - is part of a larger effort in the institute to disseminate its work on institutions and governance.
Credit default swaps (CDS) which constitute up to 98% of credit derivatives have had a unique, endemic and pernicious role to play in the current financial crisis. However, there are few in depth empirical studies of the financial network interconnections among banks and between banks and nonbanks involved as CDS protection buyers and protection sellers. The ongoing problems related to technical insolvency of US commercial banks is not just confined to the so called legacy/toxic RMBS assets on balance sheets but also because of their credit risk exposures from SPVs (Special Purpose Vehicles) and the CDS markets. The dominance of a few big players in the chains of insurance and reinsurance for CDS credit risk mitigation for banks’ assets has led to the idea of “too interconnected to fail” resulting, as in the case of AIG, of having to maintain the fiction of non-failure in order to avert a credit event that can bring down the CDS pyramid and the financial system. This paper also includes a brief discussion of the complex system Agent-based Computational Economics (ACE) approach to financial network modeling for systemic risk assessment. Quantitative analysis is confined to the empirical reconstruction of the US CDS network based on the FDIC Q4 2008 data in order to conduct a series of stress tests that investigate the consequences of the fact that top 5 US banks account for 92% of the US bank activity in the $34 tn global gross notional value of CDS for Q4 2008 (see, BIS and DTCC). The May-Wigner stability condition for networks is considered for the hub like dominance of a few financial entities in the US CDS structures to understand the lack of robustness. We provide a Systemic Risk Ratio and an implementation of concentration risk in CDS settlement for major US banks in terms of the loss of aggregate core capital. We also compare our stress test results with those provided by SCAP (Supervisory Capital Assessment Program). Finally, in the context of the Basel
Conventional models of the politics of economic reform tend to be based on an assumption about the costs and benefits of reform, known informally as the J-curve. Reforms are expected to make things worse before they get better. This presents a classic rime inconsistency dilemma for reformist governments forced to demand severe sacrifices from the public in the short term for the mere promise of future gains. In response, political economy models of the reform process have tended to stress the importance of insulating governments from the pressures of the shortterm losers until a sufficient constituency of winners has been created with a stake in supporting and enhancing the reforms. Based on evidence from the postcommunist transitions, this article suggests that the most serious political obstacles to the process of economic reform have come not from the short-term losers but from the short-term winners. Groups that gain substantial rents from the early distortions of a partially reformed economy have a stake in maintaining a partial reform equilibrium that generates high private gains, but at a considerable social cost. In these countries, the main political challenge has been, not to marginalize the losers, but to restrain the winners. This explains the paradoxical outcome of the postcommunist transitions: that political systems which are more inclusive of the losers have been able to adopt and sustain more comprehensive economic reforms than states insulated from popular pressures.
Without a number of fairly fundamental changes in the international economic system, most obviously in the global distribution of resources, the state is unlikely to be able to deliver the designated outputs required to contain corruption. Whether or when these changes are likely to take place and from where their impetus might spring are questions that are well beyond the scope of a contribution such as this. What seems clear, however, is that future policy initiatives must address the specific political and economic realities of the states they target. In some (perhaps an increasing number of) cases this will involve shifting the dominant focus of reform away from the centre to a lower level of the political terrain. Here the city would seem to be an obvious candidate: world cities are major sites for the concentration and accumulation of capital, key indicators of the ebb and flow of economic activity; 'the keyboard of the global economy'.19 The cities of the South have been particularly hard hit by recession, the debt crisis, general economic decline and environmental degradation. Accordingly, as the twenty-first century unrolls global cities are certain to be at the crossroads of social conflict, political upheaval and general turmoil. But, from whatever perspective these and other challenges are confronted, the principal aim must be to strive to steer a middle course between facile anti-globalisation, on the one hand, and the 'one-size-fits-all' discourse of good governance, on the other.
Bureaucratic corruption is one of the most serious and embarrassing obstacles to national development in the developing countries, which include among others the members of the Association of Southeast Asian Nations (ASEAN) viz., Indonesia, Malaysia, Philippines, Singapore, and Thailand. According to an official of the Economic and Social Commission for Asia and the Pacific:
Donor countries and the United Nations bodies working in developing countries are well aware that one of the most serious problems hampering development is corruption; so are the recipient countries. But no one seems prepared to discuss it publicly.
In the mid-1990s an international consensus in development discourse has emerged: democratisation, public sector down-sizing, and economic deregulation are desirable goals in themselves, but they also reduce the extensive corruption in monopolistic state agencies. This study examines these issues with reference to the politics and practicalities of anti-corruption strategies in several African societies. It is argued that although down-sizing the state and political liberalisation are desirable goals in many African countries, they are necessary rather than sufficient conditions for the reduction of corruption. Extensive public sector corruption can coexist with democratic or quasi-democratic politics (as in Nigeria in the 1980s). Economic liberalisation can also create opportunities for corruption, through the sales of parastatals in dubious circumstances, and the creation of new, corrupt markets, as can the political liberalisation of previously authoritarian regimes such as Kenya in the 1990s. For short-term anti-corruption strategies to be effective in African societies, more attention needs to be devoted to questions of sequencing, the detail of reform and its sustainability in very poor societies, and the exceptional political and managerial commitment necessary to promote and maintain reform.
Conventional models of the politics of economic reform tend to be
based on an assumption about the costs and benefits of reform,
known informally as the J-curve. Reforms are expected to make
things worse before they get better. This presents a classic time
inconsistency dilemma for reformist governments forced to demand
severe sacrifices from the public in the short term for the mere
promise of future gains. In response, political economy models of
the reform process have tended to stress the importance of
insulating governments from the pressures of the short-term losers
until a sufficient constituency of winners has been created with a
stake in supporting and enhancing the reforms.
The recent prodemocracy movements have given new life to the struggle against corruption. With their greater scope for popular expression, they tend to be less compromising in their opposition to bribery and other blatantly dishonest practices than most of the earlier campaigns carried out "from above'. But it is unlikely that any particular measure or institutional form, even if benefiting from popular involvement and control, can eliminate corruption as such. In the midst of economic collapse and chaotic political change, new impulses and opportunities for theft and dishonesty are bound to arise. Over the longer term, only a profound transformation in social and political relations is likely significantly to weaken corruption's underlying causes, with their roots deep in Africa's dependent economic and state structures. -from Author
Aid donors are increasingly seeking to link assistance to sustainable reform, including the provision of a responsible and responsive political and legal framework, the improvement of recipient countries' social, health and educational prospects, and the promotion of economic development and liberalization. Much attention is given to the first of these because of the size and cost to the state and the perceived constraints it exercises on the longer-term changes to the economy and society; in general terms, good government is an essential precondition for good governance and economic development. Increasingly donors have focused on corruption, both as a core obstacle to the encouragement of good government, and on the steps taken to dealing with it as evidence of commitment and the will of recipient countries to their introduction. While the types of activity associated with corruption are readily identifiable, as are the means to attempt to deal with it, it is usually much more difficult to determine effective implementation, particularly with limited resources at a time when longer-term political and economic reforms are also being promoted. It is therefore especially important that, in relation to corruption and good government, a practicable, effective and sustainable means is available to deal with corruption from preventative, investigative and reform perspectives.
This is the twentieth in the annual series assessing major development issues. The report is devoted to the role and effectiveness of the state: what it should do, how it should do it, and how it can improve in a rapidly changing world. Governments with both centrally-planned and mixed economies are shrinking their market role because of failed state interventions. This report takes an opposite stance: that state's role in the institutional environment underlying the economy, that is, its ability to enforce a rule of law to underpin transactions, is vital to making government contribute more effectively to development. It argues against reducing government to a minimalist state, explaining that development requires an effective state that plays a facilitator role in encouraging and complementing the activities of private businesses and individuals. The report presents a state reform framework strategy: First, focus the state's activities to match its capabilities; and second, look for ways to improve the state's capability by re-invigorating public institutions. Successful and unsuccessful examples of states and state reform provide illustrations.
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ANNEX 3: VARIABLES DEFINITIONS tax Change from 1999-2002 in the country average of the percentage of firms
- World Bank
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ANNEX 3: VARIABLES DEFINITIONS
tax
Change from 1999-2002 in the country average of the
percentage of firms' annual sales paid in unofficial payments or
gifts to public officials.
in countries' Polity scores. A positive score indicates more democracy
Change in Polity, 1999-2002
Change from 1999-2002 in countries' Polity scores. A
positive score indicates more democracy.
in countries' Media Freedom scores. A positive score indicates higher levels of media freedom
Change in Media Freedom, 1999-2002
Change from 1999-2002 in countries' Media Freedom
scores. A positive score indicates higher levels of media
freedom.
Natural log of per capita GDP in US$ in 1999
- Gdp Ln