Major global trends are changing the way we approach international assistance and policy reform. Private sector-led growth has produced enormous opportunities, even as market freedom and access to opportunity remain uneven. Political upheaval has raised hopes for democratic freedoms, yet freedom too often is undermined by poor governance.
Governance reforms must adjust to these shifting circumstances. As a rule, effective reforms tap the power of free markets and the strength of citizen engagement. Each country requires distinctive sets of solutions that reflect local capabilities and needs. These solutions take shape through policy coalitions forged by local partners. Often, they benefit from international experience in convening dialogue and mobilizing support.
Strategies for Policy Reform illustrates CIPE’s approach to improving governance in cooperation with local entrepreneurial leaders. This international case collection shares program experiences and results achieved across CIPE’s four focus areas: Enterprise Ecosystems, Business Advocacy, Democratic Governance, and Anti-corruption & Ethics.
More than a week ago, the city of Beirut ceased trash collection when the landfill stopped accepting deliveries. It turns out the city’s biggest landfill is, well… full. Since then, the streets of this beautiful capital on the Mediterranean Sea have been filled with piles of garbage, rotting in the summer heat– 20,000 tons and counting. This creates obvious health hazards, and undercuts the city’s peak tourist season. Many residents are wearing masks to deal with the stench.
The Lebanese people are rightfully outraged. They see the garbage crisis as a manifestation of larger institutional failures. The country has been without a president for more than a year, and the parliament has extended its own mandate until 2017 without holding elections. The political deadlock breeds institutional paralysis, which in turn exacerbates corruption in a destructive cycle. Essential services like electricity, water, and, sure enough, waste removal are disrupted. CIPE’s longtime partner and Lebanon’s leading anti-corruption watchdog, the Lebanese Transparency Association (LTA), is not sitting idly by.
Successive governments in Pakistan have shown profound interest in increasing trade with the rest of the world by pursuing various trade and investment agreements. From a significant Free Trade Agreement (FTA) with China signed in 2006 which will soon enter its second phase, to a trade and transit agreement with Afghanistan, as well as several free or preferential trade agreements with Malaysia, Indonesia, and Sri Lanka, Pakistan is also negotiating possibilities of trade agreements and cooperation with Turkey, Thailand, and the ASEAN region. The country is also part of the regional trade agreement South Asian Free Trade Area (SAFTA) together with India, Bangladesh, Afghanistan, Nepal, and other South Asian countries. Though the agreement is not yet fully operational, it is a source of much discourse and tremendous unrealized potential for all countries involved.
Pakistan’s trade has increased overall, going from $24 billion in 2003 to $72 billion in 2014, and opening Pakistan’s markets may be a positive indicator of some improvements in Pakistan’s economy. From importing primarily oil and fuel products, Pakistan is now also importing machinery, electrical and electronic equipment, and industrial inputs. The industrial sector, particularly large scale manufacturing, witnessed a growth of about five percent in fiscal year 2014.
In 2009, Cambodia’s provincial legislatures became elected bodies for the first time in the country’s history. Against the backdrop of decentralization, this newly democratic level of government is also being called upon to handle a greater share of public service delivery. If they fail to perform, and if their increased budgets result in a dramatic expansion of corruption, democracy could be seen as failing to perform.
Provincial governments currently account for approximately 20 percent of all public sector spending in Cambodia, up from nearly zero in the late 1990s. This figure will continue to rise as provincial governments increasingly bear the financial burden of primary and secondary education, public health and sanitation, local transportation infrastructure, and basic public administration.
To help mitigate corruption risks, there is a need for greater transparency in provincial finances, increased civic involvement in provincial procurement processes, and good governance advocacy at the local level of government. To address this challenge, CIPE launched an innovative project in June 2012 with a Cambodian NGO called Silaka to reduce corruption in provincial government procurement.
“The work of development is too important to be left in the hands of governments alone. It is the responsibility of everyone. Especially the business community… Business, like governments, will have to be at the forefront of this change. No one can do it alone.”
In the latest Economic Reform Feature Service article, CIPE partner and Chief Executive Officer of the Kenya Association of Manufacturers (KAM) Betty Maina highlights the crucial role of multi-stakeholder platforms in an enabling business environment.
Posted on6 April, 2015byGuest|Comments Off on Public Procurement: The Nexus of Public and Corporate Governance in Combating Corruption
Governments around the world spend trillions on public procurement each year for everything from office supplies to military equipment to infrastructure megaprojects like this $5 billion Panama Canal expansion.
By Kirby Bryan
For over a decade, the World Bank Group’s Doing Business index has served as quintessential tool for determining how well a country’s institutional infrastructure is suited to the promotion of a productive business environment. But something was missing. Businesses and governments interact on levels beyond permitting and regulation: the public sector can also be a client.
Public procurement can provide opportunities for corruption. When seeking lucrative public contracts, companies look for any opportunity they can take advantage of that will improve their ability to secure a successful bid. Unscrupulous government officials can use their influential positions to attain favors and gifts from businesses pursuing public procurement tenders.
In March 2015, the World Bank Group, in conjunction with the George Washington University Law School, held a release event for the first installment of its Benchmarking Public Procurement Index.
What are the drivers of and institutional responses to corruption? Are current anti-corruption instruments used domestically and internationally effective? These were the key questions of a fascinating day-long event organized last week in Washington, DC by the George Washington School of Law and the International Bar Association, among others.
The event gathered a distinguished group of speakers from the government, academia, international organizations, law firms, and non-profits, as well as an engaged audience of anti-corruption scholars and practitioners.
While the discussion touched upon a multitude of corruption-related topics, the following aspects of corruption raised at event were the most valuable insights for me:
Corruption as a violation of public trust. Janine Wedel, a Berkeley-trained anthropologist and a professor at George Mason University, emphasized that corruption is more than just simple quid pro quo. Instead, it is a sophisticated network rooted in informal power, influence elites, and often aided by the post-Cold War global economic openness as the revolution of the digital age.
Corruption as a governance problem. Nikos Passas, professor at the Northeastern University, pointed out the roots of corruption in discrepancies between legitimacy and legality (lawful but awful conduct by government officials or businesses) and in unlawful but useful behavior (e.g., bribing a doctor to treat a patient in a failing healthcare system). International norms such as the United Nations Convention Against Corruption help by creating agreed-upon legal standards, but improving on-the-ground governance in countries around the world still has a long way to go. Read a Q&A with Nikos Passas here.
Private sector as a force for anti-corruption. Baker & McKenzie’s Tom Firestone stressed that a broad-based business community in a given country can be an effective force in anti-corruption efforts. He recounted his experience in Russia where local businesses resisted corrupt encroachments of the state. Local firms, after all, have a strong interest in the rule of law and a level playing field in the business environment. But they can’t do it alone.
Inter-governmental cooperation makes a difference. Kathryn Nickerson, Senior Counsel at the Department of Commerce highlighted the importance of the Organisation for Economic Co-operation and Development (OECD) Working Group on Bribery in International Business Transactions responsible for monitoring and implementation of the OECD Anti-Bribery Convention.
Corruption as an attack on human dignity. Sarah Chayes, the conference’s keynote speaker, talked about her recently published book, Thieves of State: Why Corruption Threatens Global Security. She pointed out that there is a moral dimension to corruption – it leads to widespread moral decay and individual humiliation that goes beyond money. In extreme cases of corruption-ridden countries, it is not the weakness of the state that leads to corruption. Rather, the institutions of the state have evolved to make them a conduit for corruption that permeates entire societies.
Anna Nadgrodkiewicz is Director for Multiregional Programs at CIPE.
Comments Off on What Drives Corruption and How Can Institutions Respond?
The CIPE Development Blog provides coverage of the Center for International Private Enterprise and its partner network at work -- highlighting successes, drawing out lessons from failure, and exploring the broader issues of political and economic development. For more information visit CIPE.org.