Nestle - Zaka (103)
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Transcript of Nestle - Zaka (103)
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CASECASE UkraineUkraine
www.case-ukraine.kiev.ua
Corruption in Ukraine: Behind and Corruption in Ukraine: Behind and Beyond the Orange RevolutionBeyond the Orange Revolution
Vladimir Dubrovskiy Vladimir Dubrovskiy
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Th e 2004 Transparency International CorruptionPerceptions Index
CASE Ukraine
114. Rep. of Congo 2.3Ethiopia 2.3Honduras 2.3Moldova 2.3Sierra Leone 2.3Uzbekistan 2.3Venezuela 2.3
Zimbabwe 2.3122. Bolivia 2.2
Guatemala 2.2Kazakhstan 2.2Kyrgyzstan 2.2Niger 2.2Sudan 2.2
128 Ukraine 2.2129. Cameroon 2.1
Iraq 2.1
Kenya 2.1Pakistan 2.1 http://www.infoplease.com/ipa/A0781359.html
Out of 147 countries
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CASE Ukraine
160 Liberia -0.86
161 Moldova -0.86162 Niger -0.87
163 Pakistan -0.87
164 Sierra leone -0.88
165 Kenya -0.89
166 Ukraine -0.89167 Indonesia -0.90
168 Papua new guinea -0.90
169 Belarus -0.91
170 Georgia -0.91171 Libya -0.91
172 Kyrgyz republic -0.92
173 Togo -0.92
174 Djibouti -0.94
175 Venezuela -0.94
Control of Corruption (2004), Point Estimate
Governance Matters IV:Governance Indicators for 1996-2004Daniel Kaufmann, Aart Kraay, andMassimo Mastruzzi
The World Bank, May 2005
Out of 204 countries
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CASE Ukraine
Petty corruption: medicine, education, trafficenforcement .
Corruption in state-business relations
Embezzlement and abuses of procurement
Extortion
Just increase t h e salaries and improve t h e control
Improve t h e transparency and control
Bribing
State Capture by Corrupt Networks
CollusionKarklins,
2002
Hellman,1998
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CASE Ukraine
Business Environment in Ukraine. IFC, Septamber, 2003
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CASE Ukraine
Business Environment in Ukraine. IFC, December, 2004
Corruption is perceived as a seriousimpediment for doing business
w h ile t h e ot h er impediments are connected to it
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Institutional legacy (following Nort h; Putnam)
The severity of the Russian laws is alleviated only by discretionin their enforcement just this disorder makes life in Russia
possible
Institutional memory of t h e former empire:Institutional memory of t h e former empire:
Legislation is designed intentionally? in such a way that almostEVERYONE must become a lawbreaker
Discretion is the only resort from such a total guilt
E very business is subject to the authorities E very business is subject to the authorities
CASE Ukraine
Karamsin, 19th centuryRussian historian
Gertzen, 19th century
Russian social thinker
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F ACILITATES
CASE Ukraine
Legislation(flawed,
ambiguous,impracticable)
Corruption
Discretion
ENHANCES
INTERES T INTERES T
Decreasing t h e demand for improvements
ALLEVIATESALLEVIATES
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Un controlled and mostly
affiliated wit h business
Strictly controlled and
separated from business
Possesses the political power tomagnify ambiguity and non-transparency in legislation
No decision-making power Clear separation of powers frombranches of State
Controls politicians rather than viceversa. Tries to control mass-media toavoid public scrutiny
Operates under constant publicscrutiny and political oversight
Poorly-paid and dependent uponadministrative rents in money or barter ) Relies upon discretionary power andvague and arbitrary informal rules
Highly-paid professional publicservants facilitating rational processesof control.Implements legislation in a strictlyformal impersonal ) way
Administrative power in
Ukraine
B ureaucracy (Weber)
Officials: not a bureaucracy
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CASE Ukraine
Consequences
Inh ibited business selection t h roug h th eentry and exit
Suppressed entrepreneurs h ip and F DI
Distorted political representation
Poor governance
Misuse and misallocation of resources
Hig h social costHig h social cost
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CASE Ukraine
Business Environment in Ukraine. IFC, December, 2004
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Wh ith er captured state: a deadend?
Business:
a Milk caw or
a Rent pumpfor officials
Administrativepower:
Providesprotection andpatronage for
business
Residual rig h tsof control
Public:
a passive player
Sources of rent ; permissions
Perceived totallycorrupted
Perceived
totally rent-seeking
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CASE Ukraine
Public is not passive any more
B UT
Societal structures are persistent
Authorities are committed to fight corruption seriously
Legislation did not change significantly
Executive power officials have lesser impact on the legislature
As a result of t h e revolution:
Political market emerges
F urt h er closing of
corrupt networks
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T hanks for T hanks for your attentionyour attention! !