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This is the World Bank's blog on governance and anti-corruption. It aims at providing a space for debate and knowledge sharing on this critical field of development. | Learn more...

Chile

How can technology in public procurement bring about improved governance?

Submitted by Kashmira on Mon, 2009-05-04 18:36

-Jointly submitted by Kashmira Daruwalla and Tanya Gupta

Experts have identified procurement as one of the areas most prone to corruption in the public sector.  Corruption in public contracting can take many forms, including bribery, deception (fraud) or simple abuse, affects the efficiency of public spending and donors' resources and creates waste.  Corruption is widespread in public procurement and service delivery programs.  In a study in Uganda, Reinikka and Svensson compared central government data on public grants to schools from a survey of school officials to find what fraction of grants were ultimately received by schools.  They found that schools received only 13 percent of central government spending on the program, over the period 1991–1995.  Most schools received nothing and the evidence suggested that most of the funds leaked out of the public system through procurement fraud.

In a different randomized field experiment in Indonesia, Olken found that 24% of the funds for a road project had been stolen, after comparing reported expenditure and actual expenditure. 

Towards Better Governance by the G-20: Learning from the 'Missing' ggg-8 Countries

Submitted by Kaufmann on Fri, 2009-03-27 08:12

Consider a very different “group-of-8” countries: Botswana, Chile, Mauritius, Uruguay, New Zealand, Norway, Singapore and Switzerland.  Do they have any relevance for the G-20?  Hardly, at first.  None of them are invited to the London G-20 Summit next week.  They are not G-20 members, since neither their economic size nor their population are large enough, and they lack the global “systemic significance” of most G-20 members.  None of them belongs to the EU.  This particular "group-of-8" in fact does not really exist as a formal body.

But there is a neglected rationale for the leaders of the G-20 to pay attention to this particular set of uninvited countries.  Like the G-20, they comprise a rather diverse group of developing and developed countries from different regions of the world.  But, unlike most of the G-20, this group of eight countries have exhibited high quality of national governance.

No country is perfect, obviously.  Each one in this group of 8 industrialized and emerging economies has its own challenges. But overall their quality of governance (and recent trends) exceed those of the Group-of-20, and to an extent even those of the powerful, formal, and elite Group-of-8.

This does matter.  Not just because failures of governance (among key nations in  the G-20) played a major role in today's financial crisis.  It also matters because lessons can be drawn for short and longer term initiatives from the good governance experiences from this group of 8 small countries (in short 'ggg-8' ifor this 'good governance group'-- and not in caps, since they are small, and not a formal group...).

More on Lessons from Chile for the Americas during the Crisis

Submitted by Kaufmann on Thu, 2009-02-05 11:38

In my previous blog entry, I made the case that both the antecedents of the financial crisis faced by Chile in 1982, as well as the approach taken to resolve it, provide insights for countries such as the US today -suitably adapted by circumstances, size and complexity, of course.  Nonetheless, focusing on the fundamental pillars to approach the crisis comprehensively (including fiscal and monetary policies, institutional revamp, financial workouts, regulatory reforms) always ought to be a priority, rather than endless debates about whether one initiative such as a ‘bad bank’, will be the solution.  

From its more recent experience, there are further insights from Chile for the Americas. One is Chile’s consistently effective macro-economic management over the past two decades, where fiscal surpluses (a term that appears to have been excised from the US lexicon) have been the order of the day.  In fact, ‘best practice’ stabilization funds have permitted a sizeable accumulation of public funds during the ‘fat cow’ years, for judicious use during leaner times. 

 

Lessons from America for the US Financial Crisis?: the case of Chile

Submitted by Kaufmann on Mon, 2009-02-02 11:04

Forbes Magazine invited me to write an article on corruption.  Among others, I argue that the US financial crisis is a major and overdue wake-up call to the dormant anticorruption field, which for too long has focused on conventional second-order issues (here the article).   I also suggest that some humility could help: for a change, lessons from an emerging economy could be useful to the current situation in the US.  We know that the experience of Sweden in addressing their past financial crisis  offers some insights. 

But it is also important to draw on the lessons from other countries.  Let us focus on Chile, another country in the Americas (the era of equating the US with America should be over anyway).  I am getting questions about the parallels and insights from Chile for the US crisis.  Let me bring up a few points here, with some more detail than in Forbes.