Drilling Down Through Selected Governance Diagnostic Tools

1. Drilling Down Through Selected Governance Diagnostic Tools Francesca Recanatini Sr. Economist, PRMPS The World Bank April 23, 2007

2. Which empirical tools and approaches are already available? How can we select among them? How can such assessments be used for our operational work? Objective of this session Which governance tools are more operationally relevant for our work?

3. Governance is the door to anticorruption Governance The manner in which the state acquires and exercises its authority to provide public goods & services Use of public office for private gain Corruption • Corruptionis an outcome– a consequence of weak or bad governance • Governance reform helps combat corruption by addressing its underlying causes

4. How does governance fit into our operational agenda? • Governance receives extra weight in CPIA indicator-based allocations of IDA funds • All Country Assistance Strategies (CASs) are required to address governance issues, including corruption • Increasingly, CAS’s are centered around governance issues • A key focus of the Bank is to help countries to improve their governance systems to mitigate risks for all stakeholders

5. BEEPS IGR Public Official surveys PER and PETS QSDS Score Cards Investment Climate Surveys EC Audits CFAA CPAR GAC Case Studies HIPC Exp. Tracking ROSC Life In Transition Survey (ECA region) Existing WB Empirical Tools

6. Existing Non Bank Tools (Sample) • TI Perceptions Index • UNDP GAC • Freedom House Press Freedom Indicators • MCC ratings • Afrobarometer Surveys • Global Risk Service • Business Enterprise Environment Survey • Latinobarometro Surveys • Media Sustainability Index • Business Risk Service • Transition Report • Global E-Governance • Global Competitiveness • Global Integrity Index • Human Rights Database • Open Budget Initiative • Reporters w/o Borders

7. 1. What is the purpose of the assessment? Research and analysis Awareness raising Policy and Action planning Capacity building Monitoring Key starting points

8. 2. What is the focus of the assessment? Governance as a whole Corruption Performance of a specific agency/sector Quality of a specific public service delivered Key starting points

9. PER HIPC E.T. ROSC CPAR EC Audits Public Official Surveys IGR & GAC & Governance Cross-Country Ind. CFAA QSDS SCORE CARDS PETs BEEPS & INVEST. CLIMATE Linking the Tools to State Institutions

10. Linking Governance Tools to Accountability Politicians/ Policymakers PETs Delegation of Implementation Delegation/ Voice Internal Accountability Political Accountability Citizens Public Servants client power/ social accountability public goods/ services GAC; BEEPS; PETs Scorecards Doing Business

11. CAS Operations & Capacity building Monitoring Linking Governance Tools to Accountability Political Governance Diagnostics; GAC Diagnostics, LITS Actionable indicators: PFM indicators (including PEFA, CPAR and CPAA); scorecards; Doing Business; GACs; BEEPS Specialized technical reports: BEEPS; PETs; IGRs; GSDS; ICAs; PERs: GACs

12. Three examples: Public Expenditure Tracking Survey BEEPS Governance and Anti-Corruption Diagnostic Surveys Governance tools for operational work

13. Public Expenditure Tracking Surveys (PETS) Goal: Assess fiscal leakages given significant share of intended resources do not reach the frontline

14. The PETS Cycle The Prototype: Uganda Education PETS • Remains Most Successful Case • “Leakages” of Funds Going to Schools Reduced Significantly • (~ 13% (1996) to 82 % (1999) • Methodologically Relatively Straightforward Flow • Central Government Disbursed Capitation Grant to Districts, Districts On-ward disburse to Schools. • Allocations Largely Reached Districts, But Allocations Did Not Reach Facilities

15. PETS Coverage PETS have now been conducted in 24 countries, almost exclusively in health and education. Source:Chaudhury, N et. al. 2004

16. “Business Environment and Enterprise Performance Survey” (BEEPS) Goal: Analyze how corruption, regulatory burden, and public sector factors affect the business environment • Is corruption in Eastern Europe and the former Soviet Union getting better or worse? • What explains the changes? • What motivates reform? • Are there lessons for other regions?

17. “Business Environment and Enterprise Performance Survey” (BEEPS) • Joint initiative with EBRD • 20,000 firms in 3 rounds (1999, 2002, 2005) • 26 transition countries • 6 European comparators in ‘05: Ireland, Germany, Greece, Portugal, Spain, Turkey (+ Korea and Vietnam) • Focus on corruption in enterprise-state interactions

18. BEEPS Results Corruption is falling for the region as a whole (though not yet to W.Europe levels)

19. BEEPS Results … more in some countries than others … Bribe Frequency, 2002-2005

20. BEEPS Results … and not all sectors saw improvement.

21. A demand-driven process to improve governance and build local capacity Key features: Three surveys: households, firms, and public officials Questions focus both on experienceandperceptions Questions are tested and adapted to local realities Rigorous technical requirements in implementation Local institutionimplements, with guidance from international experts Governance and A-C diagnostic surveys Goal: Greater local capacity, baseline governance data, & action plan for policy reform

22. Unbundle corruption – administrative, state capture, bidding, theft of public resources, purchase of licenses Identify weak and strong institutions Assess the costs of corruption on different stakeholders Identify key determinants of good governance Input to develop concrete policy recommendations Governance and A-C diagnostic surveys The power of diagnostic data and key dimensions for analysis:

23. The study as part of a larger process Challenge: poor governance and corruption 7. Monitoring and Evaluation of NAS Country Implemented 6. Implementation by Government End WB T.A. 5. Revision of the NAS 4. Public dissemination + discussion WBI Technical Assistance • CAPACITY • BUILDING • Local firm collects data • Local enumerators trained • Local supervision by • technical cmte. Collects EXPERIENCE & PERCEPTIONS data from service USERS & PROVIDERS (3 sources) 3. Draft of the NAS 2. Diagnostic surveys + analysis 1. Establishment of Steering Committee Key Partnership: Government + Civil Society

24. Governance and Anti-Corruption Diagnostics 2006-2007

25. Country Diagnostic Results Extent of corruption, (Selected Countries ‘03-’05)

26. Country Diagnostic Results Corruption penalizes especially the poorest citizens(% of monthly income paid for bribes as reported by households who sought a public service, 2000-2005)

27. Country Diagnostic Results Corruption increases inequality

28. Country Diagnostic Results Managers and bribes to obtain public services, Guatemala 2004 Note: Thin lines represent margins of error (95% confidence intervals) for each value. They show the range where the true (population) proportion would lie with probability 0.95 if we had drawn a random sample from this population. Figures are calculated for those managers who contacted the agency btwn July ‘03 and July ‘04. Selected services.

29. Country Diagnostic Results Cost of corruption, by firm size(as reported by managers, Guatemala 2004) Note: Figures are calculated for those enterprises that sought attention at the institution between July 2003 and July 2004. Services selected out of 12 for which data are available.

30. Country Diagnostic Results Corruption imposes barriers to households to access basic services,Sierra Leone 2003 Sierra Leone Roads Transport Authority

31. Corruption affects differently Urban and Rural areas(as reported by managers, Zambia 2003) Country Diagnostic Results % of managers reporting that bribes are very frequent… To obtain licenses and permits To speed up legal proceedings in the judicial branch To obtain basic public services To update/revise tax status To obtain contracts with state institutions

32. Purchase of positions in their institutions among co-workers , as reported by public officials, 2003-2005 Country Diagnostic Results

33. Practice of Purchasing Jobs(as reported by public officials, Zambia 2003) Country Diagnostic Results % of public officials reporting purchase of jobs is a very common practice among...

34. Public funds are mismanaged by agency(as reported by Public Officials, Sierra Leone, 2003) Country Diagnostic Results % of Public Officials that said irregularities/(misappropriations) are frequent

35. Governance and corruption indicators by province, Sierra Leone, 2003

36. Governance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C Strategy Transparency and public dissemination of the results are key The approach must be participatory at each stage of the process To sum: a few salient lessons

37. To unbundle corruption and institutional weaknesses allows to identify key areas for reform Quality control and use of rigorous analytical methods enhance the credibility of the results A Few Salient Lessons, cont.

38. About Governance Diagnostics and Statistical Capacity Building:http://www.worldbank.org/wbi/governance/capacitybuild/about.html Governance Diagnostic Surveys Country Sites:http://www.worldbank.org/wbi/governance/capacitybuild/d-surveys.html Worldwide Governance Indicators 1996-2002:http://www.worldbank.org/wbi/governance/govdata2002/index.html The Business Environment and Enterprise Performance Survey (BEEPS) 1999-2000:http://info.worldbank.org/governance/beeps/ The Business Environment and Enterprise Performance Survey (BEEPS II) 2002:http://info.worldbank.org/governance/beeps2002/ Courses and Surveys: Governance Diagnostic Capacity Building:http://www.worldbank.org/wbi/governance/capacitybuild/courses.html Step by Step Guide to Governance Diagnostic Empirical Tools Implementation:http://www.worldbank.org/wbi/governance/capacitybuild/diagnostics.html WBI Governance on the Web