Measuring and Reducing the Impact of Corruption in Infrastructure Charles Kenny (IEF)
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Transcript of Measuring and Reducing the Impact of Corruption in Infrastructure Charles Kenny (IEF)
Measuring and Reducing the Impact of Corruption in
Infrastructure
Charles Kenny(IEF)
Licences, Health and Fire Inspections, 28
Tax, 18
Customs, 12
Legislation and Regulation, 2
Utility Connections,
11
Government Contracts, 15
Infrastructure in the Bribe Budget
BEEPS data
Percentage of All Bribe Payments Made for Various Activities
What Construction Firms Bribe For
BEEPS data
Percentage of Revenues Paid in Bribes for Various Activities
0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6
Laws/decrees
Other
Health/fire
Courts
Utilities
Customs
Contracts
Taxes
Licences/Permits
Percentage of Revenues in Bribes
All Firms Construction
Outline
• Problems of Perception
• Surveys: Knowledge with Limits
• Measuring the Economic Impact of Corruption
• What Does this Mean for the Bank?
Outline
• Problems of Perception
• Surveys: Knowledge with Limits
• Measuring the Economic Impact of Corruption
• What Does this Mean for the Bank?
Peru: Corruption and the TI CPI
0
1
2
3
4
5
6
7
1998 1999 2000 2001 2002 2003 2004 2005
3
3.2
3.4
3.6
3.8
4
4.2
4.4
4.6
% Transactions Involving Bribe CPI
Corruption Scandal Sept 2000
0
1
2
3
4
5
1 10 100
% Firms Pay Bribe for Water Connection
TI C
orr
up
tio
nTI Perceptions and Infrastructure
Outline
• Problems of Perception
• Surveys: Knowledge with Limits
• Measuring the Economic Impact of Corruption
• What Does this Mean for the Bank?
Corruption in Construction Across Countries
1
2
3
4
5
Uzbek
istan
Turke
y
Russia
Poland
Ukrain
e
Estonia
Slovak
ia
Czech
Rep
ublic
Azerb
aijan
Co
ntr
ac
t V
alu
e i
n B
rib
es
(1
=0
, 6>
20
%)
Corruption in Construction Across Countries
0
10
20
30
40
50
60
70
80
Sou
th A
frica
El S
alva
dor
Hon
dura
sLe
soth
oIn
done
sia
Cap
e Ve
rde
Uga
nda
Nic
arag
uaP
hilip
pine
sS
eneg
alE
cuad
orG
uyan
aM
alaw
i
Mal
iS
ri La
nka
Egy
ptV
ietn
am
Nig
erB
enin
Leba
non
Gua
tem
ala
Cam
eroo
n
Indi
a
Firms expected to give gifts to get a construction permit (%) Firms expected to give gifts to get an operating license (%)
Firms expected to give gifts in meetings with labor inspector (%)
Outline
• Problems of Perception
• Surveys: Knowledge with Limits
• Measuring the Economic Impact of Corruption
• What Does this Mean for the Bank?
The Economic Costs of Corruption
0
5
10
15
20
Financial Loss (5% Expenditure)
$U
S b
n
The Economic Costs of Corruption
0
5
10
15
20
Financial Loss (5% Expenditure) Economic Cost of Finacial Loss (50%Deadweight of 5 % Expenditure)
$U
S b
n
The Economic Costs of Corruption
0
20
40
60
80
Financial Loss (5%Expenditure)
Economic Cost of FinacialLoss (50% Deadweight of
5 % Expenditure)
Economic Cost ofCorruption Outcomes
(3.41x 5% Financial Cost)
$U
S b
n
?
Bad and Worse Corruption
?0
10
20
30
No Corruption Pay 20% TooMuch
Lose 20%Materials/Work
Divert Moneyfrom O&M
Eco
no
mic
Rat
e o
f R
etu
rn
Outline
• Problems of Perception
• Surveys: Knowledge with Limits
• Measuring the Economic Impact of Corruption
• What Does this Mean for the Bank’s Work?
National Budgeting
Sector Policy
Project Selection
Project Construction
Operation
Sector Reform: The Case of Chile
• Private (Competitive) Provision
• Strong Regulation• Integrated Planning• Output/Performance Based
Contracting
Output Based Aid
• Technology-Neutral
• Limits Uneconomic Investments
• Easy Monitoring
Community-Driven Development
• Reflects Local Priorities
• Participatory Development and Monitoring
• Incentives for Oversight
Additional Tools
• Independent Oversight, External Monitoring
• Publication• Integrity Pacts• Clear Responsibilities, Clear
Sanctions• Audits –Financial and Physical
Paraguay Road Maintenance
• Monitored Results• Accountability• Transparency• Participation
Partnerships
• IFCES
• PACI
• CoST
PACI Process
Measuring and Reducing the Impact of Corruption in
Infrastructure
Charles Kenny(IEF)