Corruption Some Definitional Issues Some Costs Some Approaches

Corruption – Some Definitional Issues, Some Costs, Some Approaches Governance for Young Leaders GDLN Series James Anderson World Bank February 23, 2004

After a visit to a doctor, the doctor is given a box of chocolates Source: Governance And Service Delivery In The Kyrgyz Republic – Results Of Diagnostic Surveys The World Bank, 2002.

After a visit to a doctor, the doctor is given money (in addition to the official payments) Source: Governance And Service Delivery In The Kyrgyz Republic – Results Of Diagnostic Surveys The World Bank, 2002.

At the beginning of a visit to the doctor, the doctor is given a box of chocolates Source: Governance And Service Delivery In The Kyrgyz Republic – Results Of Diagnostic Surveys The World Bank, 2002.

At the beginning of a visit to the doctor, the doctor is given money (in addition to the official payments) Source: Governance And Service Delivery In The Kyrgyz Republic – Results Of Diagnostic Surveys The World Bank, 2002.

During a visit at the hospital, money (in addition to the official payments) is offered to doctors and nurses to ensure proper care Source: Governance And Service Delivery In The Kyrgyz Republic – Results Of Diagnostic Surveys The World Bank, 2002.

During a visit at the hospital, money (in addition to the official payments) is requested by doctors and nurses to ensure proper care Source: Governance And Service Delivery In The Kyrgyz Republic – Results Of Diagnostic Surveys The World Bank, 2002.

A student gives a gift to a university professor in order to influence his grade Source: Governance And Service Delivery In The Kyrgyz Republic – Results Of Diagnostic Surveys The World Bank, 2002.

A traffic policeman fines someone for an infraction; the driver offers a smaller amount and indicates that no receipt is required Source: Governance And Service Delivery In The Kyrgyz Republic – Results Of Diagnostic Surveys The World Bank, 2002.

A company gives some gift or money (in addition to the official payments) to a government official to avoid waiting in a long line Source: Governance And Service Delivery In The Kyrgyz Republic – Results Of Diagnostic Surveys The World Bank, 2002.

At the beginning of a court case, one of the parties to the suit gives the judge a gift Source: Governance And Service Delivery In The Kyrgyz Republic – Results Of Diagnostic Surveys The World Bank, 2002.

A company gives some gift or money (in addition to the official payments) to a tax inspector to avoid paying more taxes Source: Governance And Service Delivery In The Kyrgyz Republic – Results Of Diagnostic Surveys The World Bank, 2002.

Cataloging the Costs of Corruption (trying to, at least) n Impact on Business Development n Impact on the Quality of Government Services n Fiscal Impact n Impact on the Poor

Impact on the Business Development n The financial return to red tape n Opacity rules n Deters foreign investment n Small firms, new firms hit hardest n Attracts and rewards firms that play the game Vicious Circle

Impact on the Quality of Government Services n Weakened resource base n Procurement of inferior goods and supplies n Attracts and rewards employees who play the game Vicious Circle

Fiscal Impact n Revenues weakened Corruption in tax and customs n Unofficial economy n Weakened tax base through effects on growth n n Expenditures wasted Corruption in procurement and subsidies n Misallocation toward wrong programs and policies – “roads to nowhere” n

Impact on the Poor n Poor quality services n Misdirected social services n Weakened access to services n Exacerbates inequality n Misdirection of budget away from services with weak constituency

The list goes on … n Weakened credibility of the state n Loss of trust between citizens and the state

The Human Dimension "During privatization, those people who had a patron received five or six cows, but the rest didn't receive anything. The whole collective farm was plundered, and the chairman, together with the district leaders, themselves took the remaining 100 head of cattle to Turkey and sold them for $2 a kilo. ” “A friend of mine went to the hospital with an ulcer that had to be operated on. One of the doctors told him directly, "If you pay, we'll operate immediately". He couldn't pay and was sent over to the hospital in Haskovo. ” Bulgaria, 1997 An Armenian farmer “Directors falsify grades for rich students and simply sell them diplomas. ” “Not every disabled person can afford the procedures to qualify for disability payments. ” Ukraine, 1996 Moldova, 1997 Voices of the Poor World Bank

Multipronged Strategy for Reducing Corruption Institutional Restraints • Independent and effective judiciary • Legislative oversight • Independent prosecution, enforcement Civil Society Participation • Freedom of information • Public hearings of draft laws • Role of media/NGOs Public Sector Management • Meritocratic civil service with monetized, adequate pay • Budget management (coverage, treasury, procurement, audit) • Tax and customs administration Political Accountability and Monitoring • Transparency in party financing • Disclosure of parliamentary votes • Asset declaration, conflict of interest rules Competitive Private Sector • Regulatory simplification for entry • Competitive restructuring of monopolies • Transparency in corporate governance

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