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On the Optimal Location of the Anti-Corruption Agency

On the Optimal Location of the Anti-Corruption Agency. Bryane Michael, Oxford University. Motivation: Donor supported ACAs. 7. 2. ACAs blooming across the world…some less successful. Why is optimal location a problem?. PM’s Office. President’s Office. SAI. Ombundman’s Office.

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On the Optimal Location of the Anti-Corruption Agency

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  1. On the Optimal Location of the Anti-Corruption Agency Bryane Michael, Oxford University

  2. Motivation: Donor supported ACAs 7 2 ACAs blooming across the world…some less successful

  3. Why is optimal location a problem? PM’s Office President’s Office SAI Ombundman’s Office Parliamentary Office Justice Finance Interior Public administration school Planning Agency Procurement body Etc. Civil Society Councils Business Assocs. Many different areas to locate ACA work….

  4. J’accuse • Many ACAs established with donor funds have been insufficiently thought-out. Their location and activity have been the result of convenience or “common sense” rather than hard and rigorous thinking about the best place to put them.

  5. Overview: Where to place the ACA? • Literature Overview • Transactions cost-based approaches • Organisational Theory approaches • Other issues • A general theory of ACA location • Extensions

  6. Advice - Literature Much practical advice but little judgment building….

  7. Static versus dynamic efficiency guns Push the frontier with AC knowledge Transparency and accountability Get us to the frontier butter Literature doesn’t look at pushing the AC frontier…

  8. New Institutional Economics: Transactions Costs “viscosity” Existence and location of organisation established to minimise transactions costs * Information problems *contracting *Agency problems ACA should minimise costs of doing AC work

  9. Property Rights and Incentives incentives PRs unit Relative allocation of PRs • Property right theory: • ACA gives property rights to organisations • Those who can maximise the value of those property rights should be given control over ACA…. • Can “weight” entities by the efficiency of control over property rights ACA should maximise incentives (returns) to doing AC work

  10. “Gravity Model of Location” • Minimise the “weight” and the “distance” • Simultaneously Max (PR incentives) and Min (transact costs) Unit should be located closer to the “action” Corruption is everywhere homogeneous, anti-corruption activity which is unequally distributed

  11. Slight Reformulation: A Network Perspective • Without the unit, there are 2^n possible linkages • With the unit, reduces complexity • Depending on network structure, decentralisation or centralisation better

  12. Organisational Issues “boundary spanning” “specialisation” Choose organisational form which maximises returns to both boundary Spanning and specialisation Optimal allocation depends on returns to each activity and complementarities…

  13. Boundary Spanning v. Specialisation? prosecution investigation audit “Civil society” narking Police should know something about audit …but not too much because costly Know not enough Know too much Not just common sense, should be guided by hard data….

  14. The Problem • Two Decisions • Location? • Parliament • Executive • Separate • Civil Society • Centralisation • Separate Unit • Tight Co-ordination • Loose Co-ordination • Laissez-faire State

  15. An Outline of the Solution centralisation Location depends on key factors…

  16. Defining an Optimal Location Value Of centralisation S Min (tc) & Max (pr) D Politics and autonomy Level of Anti-Corruption Activity Assessing the costs and benefits….

  17. Comparative Statics: Demand Shift Value Of centralisation Increase in need for programme S D’ D Level of Anti-Corruption Activity More cats imply more herding required…

  18. Comparative Statics: Supply Shift Value Of centralisation S S’ D Level of Anti-Corruption Activity More capacity implies less need for herding…

  19. The Problem Revisited At the top In the Ministries State Decentralised

  20. The Problem Revisited (2) State Toward Organisation set A Toward Organisation set B In the “centre”

  21. The Problem Revisited (2) At the top In the Ministries Toward Organisation set A State Toward Organisation set B In the “centre” Decentralised

  22. Extensions I: Matching C to AC corruption State Corruption adjusted location

  23. Extensions II: Political Attraction and Repulsion foes friends State Either “higher” or set up two agencies Can also set up a “two-colored” institutional arrangement (math theory) Corruption adjusted location

  24. Extensions (2): Knowledge Changes Everything If one of ACA’s tasks is to “build capacity” (develop knowledge), then have “repulsion” rather than attraction rule

  25. Dynamics centralisation Small then big fish Seek and destroy Big then small fish time Time profile of the optimal location changes over time

  26. Complications • Legal basis • History • Personalities • Strategic behaviour (if they know why you locate it, they will try to act for or against) • “Institutionalisation” • International dimension

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