Tag Archives: world bank

The Future of the Anti-Corruption Movement

speak up corruption

“Corruption was a taboo word in 1996. My advisors were worried about using the c-word in my speech.”

Nearly 20 years have passed since the former World Bank President, James Wolfensohn, gave his groundbreaking speech on the “cancer of corruption” at the World Bank’s 1996 Annual Meetings. And the anti-corruption movement has come a long way.

At the World Bank’s discussion Speak Up Against Corruption, which featured Wolfensohn; Dr. Jim Kim, World Bank Group President; Paul Volcker, Former Chairman of the Federal Reserve; Cesar Purisima, Secretary Finance of the Philippines; and Haguette Labelle, Chair of Transparency International, the panelists reflected on how much work there remains to fight corruption at the international and local levels.

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Impact of Business Environment Reforms on New Firm Creation

Not enough businesses like these are being created in places like Guatemala. (Photo: Michael Swigart)

Not enough businesses like these are being registered in places like Guatemala. (Photo: Michael Swigart)

We know that developing countries need entrepreneurship — especially formal entrepreneurship — in order to drive growth, expand access to opportunity, and address youth unemployment. Yet only 4,000 to 5,000 new firms register each year in places like Belarus, Guatemala, and Tunisia. Can business environment reforms, as prescribed by Hernando de Soto and spotlighted by the World Bank’s Doing Business project, make the difference?

Searching the World Bank’s Entrepreneurship Database for business registry data, Leora Klapper and Douglas Randall analyze what business environment reforms mean in practice. The upshot: big reforms can boost private sector activity but token reforms do not. Their important research is summarized in the “Impact of Business Environment Reforms on New Firm Creation,” the latest release from CIPE’s Economic Reform Feature Service.

This article is excerpted from the forthcoming thought leader report on “Creating the Environment for Entrepreneurial Success.”

Read the whole article here.

Doing more than business

Not every private sector development expert in the world participates in the World Bank Doing Business Indicators Survey, but those that do will be filling out those surveys this month and next. With those indicators heavy on the minds of many who have worked to improve them since a year ago, these two months are a good time to point out the difference between good governance and democratic governance.

The DB indicators’ nine core areas – Starting a Business, Dealing with Construction Permits, Registering Property, Getting Credit, Protecting Investors, Paying Taxes, Trading Across Borders, Enforcing Contracts, Closing a Business – measure institutional performance of key government functions for private sector activity. A growing number of governments care about their performance on these measures and they see it as a competition. Yet the indicators have important limits outlined in each core areas’ methodology that analysts and media often overlook.

For example, under the Closing a Business area, among other specifics the assumed case study company is a hotel with 201 employees and its only asset and source of income is the hotel property. The value of the hotel is 100 times the income per capita of the economy. The hotel is defaulting on a 10-year loan collateralized by the hotel property and/or a universal business charge where applicable. How many businesses in a given country fit that exact mold?

While assumptions are necessary for the purpose of gathering data, they are important caveats that analysts and reformers often overlook when evaluating the future success of DB-type reforms. How do analysts or reformers know which DB core areas are most relevant to a given country context? If a country improves its score on a core area, how meaningful is that improvement to that country’s private sector?

Just because DB indicators don’t answer those questions doesn’t mean the indicators are useless. Rather than being a way of making governments compete to achieve top-down indicator-specific reforms, the DB indicators can be a useful subject for constructive dialogue between government reformers and private sector stakeholders. The quality of that dialogue is what matters for democratic governance.

No matter how divided politically or ethnically, time and time again economic issues have united disparate factions and helped governance improve democratically as well as functionally. Kenya’s 2007-8 post-election violence and resolution is a powerful recent example of such dialogue that has paved the way for many governance and business-environment improvements, including a vastly improved constitution.

When your reform process itself includes tax-paying citizens and businesses as a driving force, then you do more than improve your DB score and ranking. You’ve embedded those reforms in your country’s ongoing historical process of institutional change. You’ve made those reforms meaningful and applicable to your specific country context. Perhaps you’ve even contributed to a healing process for decades’ or centuries’ old conflicts. In short, you’ve improved democratic governance.

Quiet Corruption

“Quiet corruption” – the failure of public servants to deliver goods or services paid for by governments – is pervasive and widespread across Africa and is having a disproportionate effect on the poor, with long-term consequences for development, according to a new report from the World Bank.

This is according to the World Bank’s newly released Africa Development Indicators. Read more in the press release on the World Bank website or check out the report itself.

Overall, the report is interesting in that it shows that corruption is not just about bribery (exchange of money in brown envelopes), its much more complex than that. Report visual – “quiet corruption” as the bottom [larger] part of the iceberg hidden below the water level.

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Less Talk, More Action on Corruption

Dani Kaufmann, the mastermind behind the World Bank’s governance indicators and so many other anti-corruption and good governance things, is leaving the World Bank after several decades there to take up a new position at Brookings.

He shared his thoughts on leaving the Bank and the anti-corruption climate in an e-mail sent out colleagues and partners, which is now available on his own blog.

In all, the tone of the letter suggest some frustration (quite justified if you ask many experts in the field) over the lack of real action on the anti-corruption front today. As he puts it:

In many respects, the governance and anticorruption field, and movement, are in a silent crisis nowadays, due to reasons I will expand on elsewhere.  Overall, there has been a lack of resolve by many governments and institutions to focus on what really matters, while wasting efforts on sideshows.  By contrast, amidst the current crisis it is commendable the way some citizens, smaller indigenous NGOs, and a few leaders are involved in innovative and courageous initiatives in some countries.

Kaufmann generated a lot of knowledge while at the Bank.  One of my favorite papers was the one he did

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