Recasting Governance for the XXI Century - Presentation Submitted - - PDF document

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Recasting Governance for the XXI Century - Presentation Submitted - - PDF document

___________________________________________________________________________ 2006/SOM1/ACT/WKSP/007a Recasting Governance for the XXI Century - Presentation Submitted by: Miguel Schloss, Managing Partner DamConsult Ltd. APEC Workshop on


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___________________________________________________________________________

2006/SOM1/ACT/WKSP/007a

Recasting Governance for the XXI Century - Presentation

Submitted by: Miguel Schloss, Managing Partner DamConsult Ltd. APEC Workshop on Anti-Corruption Measures for the Development of SMEs Ha Noi, Viet Nam 24-25 February 2006

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1

RECASTING GOVERNANCE TO COMBAT CORRUPTION AND UNLOCK COMPETITIVENESS

Miguel Schloss

APEC WORKSHOP ON ANTI-CORRUPTION MEASURES FOR THE DEVELOPMENT OF SMEs

February 24-25, 2006 Hanoi, Vietnam

Implications Implications

More costly public investments Lower government revenues Lower expenditures on operations and maintenance Lower resource surpluses

Poorer economic performance Poorer economic performance

CORRUPTION CORRUPTION

THE DEMAND SIDE THE DEMAND SIDE

Controlling Bribery and Civil Liberties Controlling Bribery and Civil Liberties

AGO ARG AUS AUT BEL BFA BRA CAN CHE CHL CHN CIV CMR COL CRI CZE DEU DNK EGY ESP ETH FIN FRA GBR GHA GRC GTM HND HUN IDN IND IRL ISL

ISR

ITA JOR JPN KEN KOR LSO LUX MAR MEX MOZ MUS MWI MYS NAM NGA NIC NLD NOR NZL PER PHL POL PRT RUS SGP SVK SWE SWZ THA TUN TUR TWN TZA UGA UKR USA VEN VNM ZAF ZMB ZWE r=0.67

Civil Liberties Bribery (GCS97+)

LOW

BRIBERY LOW HIGH

Source: Kaufmann and Sachs (1998)

(Freedom House)

HIGH BRIBERY

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2

Bribery vs. Civil Service Professionalism Bribery vs. Civil Service Professionalism

BGR CZE SVK KAZ BRA CAN CHE CHL CHN COL CRI CZE DEU DNK ESP FIN FRA GBR GRC GTM HKG HND HUN IDN IND IRL ISL ISR ITA JOR JPN KOR LUX MEX MYS NIC NLD NOR NZL PER PHL POL PRT RUS SGP SLV SVK SWE THA TUR TWN UKR USA VEN VNM ZAF ZWE

r=0.86

Civil Service Professionalism Bribery

HIGH LOW LOW HIGH

Corruption and Regulatory Corruption and Regulatory Discretion Discretion

ARG AUS AUT BEL BRA CAN CHE CHL CHN COL CRI CZE DEU DNK ESP FIN FRA GBR GRC HKG HUN IDN IND IRL

ISR

ITA JPN KOR LUX MEX MYS NGA NLD NOR NZL PHL POL PRT RUS SGP SWE THA TUR TWN USA VEN VNM ZAF

r=0.76

Regulatory discretion (GCS97) Corruption

High corruption Low corruption Low High

Even more important (than regulatory interventions) in understanding bribery and corruption is the degree of regulatory discretion.

Time Management Spent with Time Management Spent with Bureaucrats and Frequency of Bribery Bureaucrats and Frequency of Bribery

ARM ARM AUT AUT AZE AZE BEN BEN BGR BGR BLR BLR BOL BOL CAN CAN CHE CHE CIV CIV CMR CMR COG COG COL COL CRI CRI CZE CZE DEU DEU ECU ECU ESP ESP EST EST FJI FJI FRA FRA GBR GBR GEO GEO GHA GHA GIN GIN GNB GNB HKG HKG HUN HUN IND IND IRL IRL ITA ITA JAM JAM JOR JOR KAZ KAZ KEN KEN KGZ KGZ KOR KOR LTU LTU LVA LVA MAR MAR MDA MDA MDG MDG MEX MEX MKD MKD MLI MLI MOZ MOZ MUS MUS MWI MWI MYS MYS NGA NGA POL POL PRT PRT RUS RUS SEN SEN SGP SGP SVK SVK TCD TCD TGO TGO THA THA TUR TUR TZA TZA UGA UGA UKR UKR USA USA UZB UZB VEN VEN ZAF ZAF ZMB ZMB ZWE ZWE

R =.77 R =.77

10% 10% 20% 20%

30% 30%

Frequency of bribery Frequency of bribery (WDR 1997)

(WDR 1997)

% Management Time % Management Time with bureaucrats with bureaucrats

Low Low High High

Source: Kaufmann and Source: Kaufmann and Wei Wei (1998) Data analysis based on survey conducted under the World (1998) Data analysis based on survey conducted under the World Bank’s World Development Report 1997. Bank’s World Development Report 1997.

11

Corruption and Rule of Law Corruption and Rule of Law

ZWE ZMB ZAR ZAF VNM VEN USA URY UGA TZA TWN TUR TUN THA SYR SWE SVK SGP SAU RUS ROM QAT PRT POL PHL PER PAN PAK OMN NZL NOR NLD NGA MYS MMR MEX MAR LKA LBY KWT KOR KEN JPN JOR ITA

ISR

IRQ IRN IRL IND IDN HUN HKG GRC GHA GBR FRA FIN ESP EGY ECU DZA DNK DEU CZE CRI COL CMR CIV CHN CHL CHE CAN BWA BRA BOL BHR BGR BGD BEL AUT AUS ARG ARE AGO

r=0.82

Rule of Law

(ICRG, average 1990s)

S&P-DRI Corruption Index

LOW HIGH LOW HIGH

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3 Corruption Perception By Corruption Perception By Regions Regions

10 20 30 40 50 60 70 80 90 100

OECD East Asia Middle East and North Africa South Asia Latin America and Caribbean Former Soviet Union Sub-Saharan Africa

%

Corruption Control By APEC Corruption Control By APEC Countries Countries

Legal Legal-

  • Judicial:

Judicial:

  • Independence
  • Judicial Strengthening
  • ADR Mechanisms

Corruption Corruption Economic Policy: Economic Policy:

  • Deregulation
  • Tax Simplification

Financial Financial Controls: Controls:

  • Audit
  • Procurement

Civil Service: Civil Service:

  • Pay
  • Meritocracy

Public Oversight: Public Oversight:

  • Parliamentary Oversight
  • Civil society and media
  • “Power of data”/Surveys
  • Independent agency/NGO

Multipronged Strategy for Multipronged Strategy for Combating Corruption Combating Corruption

CORRUPTION CORRUPTION

THE SUPPLY SIDE THE SUPPLY SIDE

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4 Bribers Payers Index 2002 Bribers Payers Index 2002

2 4 6 8 10

Australia Sweden Switzerland Austria Canada Netherland Belgium UK Singapore Germany Spain France USA Japan M alaysia Hong Kong Italy South Taiwan China Russia Domestic

1999 2002

Bribery in Business Sectors

10 20 30 40 50 60 70 80 90 100 Public works/construction Arms and defense Oil and gas Real estate/property Telecoms Power generation/transmission Mining Transportation/storage Pharmaceuticals/medical care Heavy manufacturing Banking and finance Civilian aerospace Forestry IT Fishery Light manufacturing Agriculture

OECD & Other International Conventions to Combat Corruption Other governmental initiatives Global business codes Sectoral Codes Professional codes Donor actions Stakeholders networks

CORRUPTION CORRUPTION

The Demand and Supply Response The Demand and Supply Response

Multipronged Strategy for Multipronged Strategy for Combating Corruption Combating Corruption

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5

Professional Coordination

Homogenous products Primary data (invoices, contracts) Information analysis (price ranges, averages) Bulletin, Publications, Dissemination Monitoring Results

Fighting Corruption Fighting Corruption

Price Comparisons Price Comparisons

Meeting with Stakeholders, including media

Levelling Playing Field; Technical Experts Agenda, Trade-Offs Assessment, Discussion, Minutes Explicit Resolution of Issues

Fighting Corruption Fighting Corruption

Public Hearings Public Hearings

Fighting Corruption Fighting Corruption

No-bribery commitment by bidders Commitment of government to prevent extortion and acceptance of bribes Disclosure of payments Sanctions against bidders who violate their no-bribery commitment Involvement of civil society in monitoring bid evaluation, award decision process and implementation of the contract

Integrity Pacts Integrity Pacts

Fighting Corruption Fighting Corruption

Strategic positioning (vulnerable areas). State-of-the-art expertise. Constituency grounding. Opening to outside bidders. Watch up-scaling implications Risks of bureaucratization Focus on systemic issues Safeguards for whistleblowers, arbitration vehicles.

Evaluation

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6

Conclusions Conclusions

  • Actions requires ownership: demand for accountability,

responsiveness, partnerships.

  • Performance requires surveillance: checks and balances,

plurality, emancipation/empowerment.

  • Sustainable action requires incentives: motivation,

alignment between public and individual wellbeing.

  • An isolated existence is possible -- but at a inordinate cost

in development and competitiveness.

From words to deeds From words to deeds