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TABLE 3: Outline of Corruption Solutions

Solution

Description

Benefits

Costs

Positive Examples

Key Lessons/Risks

1. External Monitoring and Punishment

  • Increase audit probabilities and strengthen anti-corruption agencies

  • Increase expected criminal punishments for corruption

  • Reduction in all forms of malfeasance, most noticeably embezzlement



  • Missing expenditures reduced by 8% in Indonesia village audit campaign




  • Formal accountability mechanisms may be captured by political interests



2. Transparency and Bottom-up Accountability

  • Increase transparency and provide information to citizens on government services

  • Improve complaint mechanisms

  • Costs of providing information to citizens and help to organize

  • Uganda newspaper campaign reduced capture of educational funds from 80% to 20%

  • Efficacy of transparency is conditional on presence of accountability mechanisms

  • Certain processes may be too complex for citizens to use

3. Internal Controls and Bureaucratic Efficiency

  • Meritocratic recruitment

  • Foster bureaucratic competition where appropriate

  • Ensure public salaries are competitive, including perks

  • Consider staff rotation

  • Reduce rents in public programs

  • Reduction in corrupt networks throughout the bureaucracy

  • Better service delivery and revenue collection

  • Higher wage bill

  • Perhaps some efficiency losses from rotation, bureaucratic competition, & simplification

  • Risk of sale of offices

  • Some tax and customs reform are net revenue raisers

  • Chile meritocratic civil service reforms in 2003

  • Lower corruption at Durban port compared to competitors

  • Latin American tax and customs reform

  • Wage interventions may not always be appropriate

  • Bureaucratic competition may cause substitution across different corrupt behaviors

  • All require interventionsongoing oversight to maintain benefits.

4. Controlling “Grand Corruption” inside States

  • Enact procedural reforms to standardized purchases and enhance market competition.

  • Develop an e-procurement system on the models of Korea, Mexico and Chile

  • Organizing auctions and bidding systems

  • Ex post oversight by states and IFIs

  • E-procurement likely to pay for itself

  • Need better empirical studies, but the costs are small and the potential benefits are very large (Korea, Mexico, Chile)

  • Consider links between grand corruption and both the organization of markets and decisions of which firms to privatize and which projects to pursue

5. Shifting Service Provision to Private Sector




  • Elimination of bureaucracy for certain aspects of service provision

  • Efficiency gains from privatization




  • Possible loss of service ethos in transfer to private sector

  • Weaker monitoring


  • Privatization of pre-shipment inspection increases tax revenue 2.6 times

  • India service privatization reduces extortion

6. International Initiatives

  • Introduce international checks through stronger enforcement of OECD Convention, more active debarment processes at IFIs

  • Better value for money for government projects

  • More competitive international markets

  • Reforms appear to have potential but generalizations difficult.

  • Potential for national courts and international arbitration regime to constrain corruption needs to be explored and strengthened

FIGURE 1: Citizens’ Corruption Perceptions (2010)


In the past three years, how has the level of corruption changed?


Note: Data drawn from Transparency International’s 2010 Global Corruption Barometer. NIS+ includes Armenia, Azerbaijan, Belarus, Georgia, Moldova, Mongolia, Russia, and Ukraine.



FIGURE 2: Development and Corruption Levels (2010)

Note: Corruption Perceptions Index drawn from Transparency International website. Human Development Index drawn from UNDP Human Development Reports website.



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