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INTEGRITY IN THE BUSINESS SECTOR Assessing Corruption ... · IMF - Middle East Center for Economics...
Transcript of INTEGRITY IN THE BUSINESS SECTOR Assessing Corruption ... · IMF - Middle East Center for Economics...
IMF - Middle East Center for Economics and Finance
and
MENA-OECD Investment Programme
Drago KOS
INTEGRITY IN THE BUSINESS SECTOR
Assessing Corruption Risks for Business
Kuwait, 22 – 25 April 2013
If we want to fight corruption
(in the business sector)….
.…we have to:
- understand the problems,
- identify and analyse their consequences,
- identify countermeasures = prepare a strategy
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How to find information on the extent of corruption?
- National and international surveys
- Interviews with experts and public
- Different types of analyses
- Comparisons with other countries/sectors
- Other means
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Transparency International CPI
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Corruption-Free World ? (by 63 199 respondents of TI in 2007)
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0% 10% 20% 30% 40% 50% 60% 70% 80%
NGOs
Religious Bodies
The Military
Registry and Permit Service
Education System
Utilities
Medical Service
Media
Tax Revenue
Legal System/Judiciary
Business/Private Sector
Police
Parliament/Legislature
Political Parties
% of respondents reporting the institutions to be corrupt
2004 2007
TI Global Corruption Barometer
Transparency International’s Global Corruption
Barometer is the largest cross-country survey to collect the general public’s views on, and experiences of, corruption. In 2010 and 2011 the Barometer interviewed more than 100,000 people in 100 countries on three questions:
- In the past 3 years, how has the level of corruption in your country changed?
- To what extent do you perceive the following institutions in your country to be affected by corruption?
- How would you assessed your current government’s action in the fight against corruption?
Results: http://gcb.transparency.org/gcb201011/results/
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Extent of Corruption
7 Source: Word Bank
0,00
0,10
0,20
0,30
0,40
0,50
0,60
0,70
0,80
OECD Southeast Asia Middle East
and North
Africa
Central and
Eastern Europe
and the Baltics
Latin America Sub-Saharan
Africa
South Asia CIS
Co
rru
pti
on
In
dex
TI Bribe Payers Index
The Bribe Payers Index ranks world’s largest economies according to the perceived likelihood of companies from these countries to pay bribes abroad. It is based on the views of business executives as captured by Transparency International’s Bribe Payers Survey.
2011, countries: 1. Netherlands (8,8), 22. Saudi Arabia (7,4), 23. UAE (7,3), 28. Russian Federation (6,1)
2011, sectors: 1. Agriculture (7,1), 5. Banking and Finance (6,9), 10. Defence (6,6), 15. Mining (6,3), 16. Oil and gas (6,2), 17. Real estate (6,1), 17. Utilities (6,1), 19. Public works and construction (5,3)
All results: http://bpi.transparency.org/bpi2011/results/ 8
World Bank “Doing Business Indicators” – DBI*
It measures the burden of selected business regulations (“ease of doing business”) in 185 countries and ranks
the countries on 10 dimensions:
- starting a business - getting credit
- dealing with c. permits - enforcing contracts
- getting electricity - trading across borders
- registering property - paying taxes
- protecting investors - resolving insolvency
* For 2013 see: http://www.doingbusiness.org/data
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World Bank DBI 2013
MENA countries:
1. (22) Saudi Arabia 14. (135) West B. and Gaza
2. (26) UAE 15. (144) Syria
3. (40) Qatar 16. (145) Iran
4. (42) Bahrain 17. (152) Algeria
5. (47) Oman 18. (165) Iraq
6. (50) Tunisia 19. (171) Djibouti
7. (82) Kuwait
8. (97) Morocco
9. (102) Malta
10. (106) Jordan
11. (109) Egypt
12. (115) Lebanon
13. (118) Yemen
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Consequences of Corruption
We have to understand the extent of corruption, its nature, consequences, likelihood,..
=
its danger(s)
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Consequences of Corruption
Social
Economic (direct, indirect)
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Social Consequences I.
Misguided and unresponsive policies and regulations
Lower acceptance of public institutions
Reduced number of quality public sector jobs
Poor performance of public sector
Exacerbated poverty and inequality
Reduced school enrolment (1 index point increase of corruption = 5 perc. points decrease of school enrolment )
Reduced life expectancy (1 index point increase of corruption = 2,5 years decrease of life expectancy )
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Social Consequences II.
Undermined rule of law
Hindered democratic, market-oriented reforms
Weakened political stability
Increased crime rates
Biased decision-making
Infringed civil and political rights
Infringed fundamental right to fair treatment
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Direct Economic Consequences I.
Decrease of investments
1 index point increase of corruption =2,5
(2,9/4,5) perc. points decrease of
investments
Increase of the tax rate (= decrease of FDI)
1 index point increase of corruption =7,5 perc. points increase of the tax rate
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Direct Economic Consequences II.
Reduction of public expenditures
1 index point increase of corruption =
1,3 – 3 perc. point decrease of public
expenditure
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Direct Economic Consequences III.
Reduction of the GDP growth
(1 index point increase of corruption = 0,13 perc.
points decrease of the GDP growth)
Average yearly reduction of the GDP growth in perc. points:
Liberia – 1,66 United A. Emirates – 0,39 Kazakhstan – 0,34 Haiti – 1,33 Zambia – 0,27 Indonesia – 1,17 Ukraine – 0,24 Panama – 0,76 Kenya – 0,18 Russian Fed. – 0,55 Cuba – 0,12 Saudi Arabia – 0,55 India – 0,11 Philippines – 0,50 Turkey – 0,06 Jamaica – 0,41
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Direct Economic Consequences IV.
Decrease of the GDP per capita
(1 index point increase of corruption = 425 $ decrease
of the per capita GDP)
Average yearly reduction in per capita GDP in $:
Liberia – 1363 Haiti – 1097 Indonesia – 964 Panama – 623 Russian Fed. – 452 Saudi Arabia – 452 Philippines – 414 Jamaica – 338 United A. Emirates – 319 Kazakhstan – 281 Zambia – 224 Ukraine – 195 Kenya – 148 Cuba – 101 India – 91 Turkey – 53
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Indirect Economic Consequences I.
Increase of income inequality
Increase of aid per capita inflows
Misallocation of resources and talents
Change in the structure of public expenditures
Decrease in public revenues for essential
goods/services
Lower productivity and innovative thinking
Increase of shadow economy
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Indirect Economic Consequences II.
Disadvantages for exporters from less
corrupt countries in highly corrupt
import countries
Reduction of competition and
efficiency
Favoring of inefficient producers
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Preparing countermeasures
= AC strategy
On the basis of the information acquired and on the basis of the corruption threat assessment for the business sector, each government has to prepare a comprehensive anti-corruption strategy, dealing with the most urgent issues first
BUT ONLY
WITH MANDATORY INCLUSION OF THE REPRESENTATIVES OF THE BUSINESS SECTOR!!
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UNCAC – Article 5, Para 1
Each State Party shall, in accordance with the fundamental principles of its legal system, develop and implement or maintain effective, coordinated anti-corruption policies that promote the participation of society and reflect the principles of the rule of law, proper management of public affairs and public property, integrity, transparency and accountability.
UNCAC, Article 12, describes main requirements for the ethical private sector. 22
THANK YOU!
QUESTIONS ?
COMMENTS ?
REMARKS ?
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Additional References
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Bose, Niloy, Capasso,Salvatore, Murshid, Antu Panini (2007). Threshold effects of corruption: theory and evidence, World Development Vol. 36, No.7 (pp. 1173-1191),www.elsevier.com/locate/worlddev Carr, Indira, Outhwaite, Opi (2008). Surveying corruption in international business, Manchester Journal of International Economic Law, Vol. 5, Issue 2 (pp. 3-70), Dreher, Axel, Herzfeld, Thomas (2005), The economic costs of corruption: a survey and new evidence, Thurgau Institute of Economics, Switzerland, Evans, Bryan R., The cost of corruption, Tearfund –Christian action with the world’s poor, Teddington, UK, Guerrero, Manuel Alejandro, Rodriguez-Oreggia, Eduardo (2008). On the individual decision to commit corruption: a methodological complement, Journal of Economic Behaviour & Organization. Vol. 65 (2008) (pp. 357-372), Ivanchevich, John M., Konopaske, Robert, Gilbert, Jacqueline A. (2008). Formally shaming white-collar criminals, Business Horizons (2008) 51 (pp. 401 – 410), Kelley School of Business, Indiana University, Kingston, Christofer (2007). Social structure and cultures of corruption, Journal of Economic Behaviour & Organization 67 (2008), (pp. 90-102), www.elseviere.com/locate/econbase, Rothstein, Bo (2007). Anti-corruption – a big bang theory, The Quality of Government Institute, ISSN 1653-8919, Göteborg University, Göteborg, Sullivan, John, Shkolnikov, Alexandr (2008). The costs of corruption, Democracy around the world, www.america.gov/st/democracy, Torgler, Benno, Schneider, Friedrich (2008). The impact of tax morale and institutional quality on the shadow economy, Journal of Economic Psychology (2008), doi:10.1016/j.joep.2008.08.004 Transparency International Global Corruption Barometer 2007, www.transparency.org/policy_research/surveys_indices/gcb