On the Power of Evidence-Based Analysis Daniel Kaufmann Plenary II: - - PowerPoint PPT Presentation

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On the Power of Evidence-Based Analysis Daniel Kaufmann Plenary II: - - PowerPoint PPT Presentation

On the Power of Evidence-Based Analysis Daniel Kaufmann Plenary II: Peace, Equality and Social Justice: Fighting Corruption in Development and Investment Beyond 2015 #16IACC, Malaysia, September 3, 2015 1 Data The scale of the challenge and


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On the Power of Evidence-Based Analysis

Daniel Kaufmann Plenary II: Peace, Equality and Social Justice: Fighting Corruption in Development and Investment Beyond 2015

#16IACC, Malaysia, September 3, 2015

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Data The scale of the challenge and its impact:

  • Extent of worldwide bribery is roughly US$1.5-US$2

trillion, about 2 percent of world’s GDP.

  • However, this figure is not the whole “cost” of

corruption.

  • The 300 percent development dividend of good

governance matters for per capita income, infant mortality, education.

  • The 20 percent “corruption tax” on foreign investors;

the tax on the poor, financial instability.

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Governance Matters: Development dividend of improved governance in resource-rich (and other) countries

Sources: GDP per capita (atop each column) from World Bank World Development Indicators, 2012. Corruption Control data from Worldwide Governance Indicators (WGI), 2012. Countries grouped into terciles based on WGI Control of Corruption scores. “Resource Rich” country classification according to IMF (2010).

Poor Corruption Control Average Corruption Control Good Corruption Control

GDP per capita (PPP)

Res esou

  • urce

rce-Ric

  • Rich C

h Cou

  • untr

ntries Non

  • n R

Reso esour urce ce Rich ich

5,000 10,000

6,851 3,941 12,712 10,272 45,000 30,820

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Select countries showing large improvement or deterioration in voice and accountability (2000-2013)

10 20 30 40 50 60 70 80 90 100

Voice & accountability % rank

2000 (Improved) 2013 (Improved) 2000 (Deteriorated) 2013 (Deteriorated)

Source: Worldwide Governance Indicators, http://www.govindicators.org

Improvement from 2000-2013 Deterioration from 2000-2013

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Select countries showing large improvement or deterioration in rule of law (2000-2013)

10 20 30 40 50 60 70 80 90 100

Rule of law % rank

2000 (Improved) 2013 (Improved) 2000 (Deteriorated) 2013 (Deteriorated)

Source: Worldwide Governance Indicators, http://www.govindicators.org

Improvement from 2000-2013 Deterioration from 2000-2013

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Accountability must complement transparency : control of corruption vs voice & accountability (WGI)

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  • 2
  • 1.5
  • 1
  • 0.5

0.5 1 1.5 2 2.5 3

  • 2.5
  • 2
  • 1.5
  • 1
  • 0.5

0.5 1 1.5 2

2013 control of corruption Worldwide Governance Indicator score 2013 voice & accountability Worldwide Governance Indicator score

r = 0.78

Note: Red data points are the 55 resource-rich countries according to the IMF. Source: IMF, 2013 World Bank Worldwide Governance Indicators.

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Select countries showing large improvement or deterioration in control of corruption (2000-2013)

10 20 30 40 50 60 70 80 90 100

Control of corruption % rank

2000 (Improved) 2013 (Improved) 2000 (Deteriorated) 2013 (Deteriorated)

Source: Worldwide Governance Indicators, http://www.govindicators.org

Improvement from 2000-2013 Deterioration from 2000-2013

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Malaysia: Worldwide Governance Indicators for voice & accountability, rule of law, and control of corruption

25 50 75 100 Voice & Accountability Rule of Law Control of Corruption Governance Indicator % Rank

2004 2013

Source: Worldwide Governance Indicators, http://www.govindicators.org.

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Corruption has Morphed: Networks, and Legal & State Capture

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Media Private Sector Municipal Government Military State (Bureaucracy) Political Parties Civil Society

International

Legislative Branch Judiciary

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Entrenched corruption networks: the case of Montesinos in Peru

Source: “Robust Web of Corruption: Peru’s Intelligence Chief Vladimiro Montesinos,” Kennedy. School of Government Case Program, Case C14-04-1722.0, based on research by Professor Luis Moreno Ocampo; Peru: Resource Dependency Network, 2000.

Vladimiro Montesinos Alberto Fujimori

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Source: AFP, http://www.abs-cbnnews.com/sports/06/02/15/look-key-players-fifa-scandal.

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Petrobras

Source: Ministerio Publico Federal, http://pt.slideshare.net/arykara7002/fluxograma-do-dinheiro-da.

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Cross-cutting mechanics: secret corporate vehicles

Image source: Radio Free Europe (2012), “Azerbaijani Government Awarded Gold-Field Rights To President's Family.”

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Corruption across the decision chain

License allocations e.g. Griffiths (Chad), Cobalt/Nizaki (Angola) Subcontracting e.g. Petrobras (Brazil), Skanska (Argentina) Saving revenues e.g. SocGen/Goldman Sachs? (Libya) Commodity sales e.g. Sphynx/AOGC & Gunvor (Congo-B), Swap contracts (Nigeria)

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Implications

  • View corruption differently: beyond an illegal

transaction between two individuals it is a problem of high-level capture of state assets, policy, regulation and

  • laws. Hence: Corruption as “the privatization of public

policy.”

  • Understanding corruption as a problem of networks and

use of innovative tools

  • To make progress on fighting corruption, integration

needed between rule of law (end to impunity), vibrant civil society and effective transparency (incl. political and corporate [beneficial ownership])

  • #16IACC “Small Idea”: a multi-stakeholder initiative to

fight impunity and corruption

  • Toward an “impunity index”