Global: Bribery costs $1 trillion a year - World Bank

Bribery costs $1 trillion a year - World Bank


Ashley Seager
Wednesday July 11, 2007
The Guardian

Bribery is costing the world $1 trillion a year with the burden falling disproportionately on the billion or so people living in extreme poverty, the World Bank said yesterday.
In a report on the quality of governance in the world's countries over the past decade, the Bank added that many poor countries had significantly improved governance and clamped down on corruption in recent years.
"Such improvements are critical for aid effectiveness and for sustained long-run growth," said Daniel Kaufmann, co-author of the report and director of global programmes at the World Bank Institute, the Bank's research arm.
"The hopeful news is that a considerable number of countries, including in Africa, are showing that it is possible to make significant governance progress in a relatively short period of time."
The world's rich countries have over the past decade written off many of the debts of the world's poorest countries under the Bank's Heavily Indebted Poor Countries (HIPC) initiative and increased aid flows to them on condition that they stamp out corruption so that the poor see the benefit. The report emphasised that good governance matters for other aspects of development such as infant mortality, illiteracy and inequality. It has also been found to significantly enhance the effectiveness of development assistance in general, and of World Bank funded projects in particular.
The Bank says the report contains the most complete set of data on governance yet published.
Some African countries are making significant strides on the path to good governance, it says, in particular Kenya, Niger, Sierra Leone, on accountability of their leaders, Algeria and Liberia on the rule of law, Algeria, Angola, Libya, Rwanda and Sierra Leone on political stability and Tanzania on corruption.
Emerging economies such as Chile, Botswana and Costa Rica as well as Estonia and the Czech republic, are matching rich countries on governance. More than a dozen score higher on good governance than Greece or Italy.
Despite improvements in individual countries, the average quality of governance around the world has not improved much over the past decade, the report adds.
For the countries that have done well, there have been a similar number that have deteriorated, including Zimbabwe, Cote D'Ivoire, Belarus and Venezuela.



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Bribery was costing the world $1trn a year with the burden falling disproportionately on the billion or so people living in extreme poverty, the World Bank said, according to The Guardian. Emerging economies such as Chile, Botswana and Costa Rica, as well as Estonia and the Czech Republic, are matching rich countries on governance. The report’s rating of corruption in the US, for example, has significantly worsened in the last decade, and last year Chile, a developing country, performed as well on this measure as the US, says The New York Times. A dozen emerging economies, including those in Chile, Botswana, Uruguay, Costa Rica, Latvia and Lithuania, scored higher on the rule of law and corruption than two industrialised countries, Italy and Greece. ‘It shows the power of data,’ said Kaufmann. ‘It begins to challenge these long-held popular notions – that the rich world has reached nirvana in governance.’ A booklet that accompanied the report said that the data undermined what it called ‘Afro-pessimism’. ‘The governance indicators can be used to challenge simplistic, and often negative, generalisations about a whole continent, revealing instead a rich variation across countries,’ it said.
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World Bank Report on Governing Finds Level Playing Field
By CELIA W. DUGGER

Africa, often stereotyped as a place of epic corruption and misrule, emerges in a World Bank report as a continent of great variety, with some countries — Tanzania, Liberia, Rwanda, Ghana and Niger — making notable progress over the past decade, and others — Zimbabwe, Ivory Coast and Eritrea — moving backward.
The report, released yesterday and based on the most comprehensive data on governance in more than 200 countries, found that not just poor countries struggled with corruption and flawed government.
The report’s rating of corruption in the United States, for example, has significantly worsened in the last decade, and last year Chile, a developing country, performed as well on this measure as the United States. A dozen emerging economies, including those in Chile, Botswana, Uruguay, Costa Rica, Latvia and Lithuania, scored higher on the rule of law and corruption than two industrialized countries, Italy and Greece.
“It shows the power of data,” said Daniel Kaufmann, an author of the report and director of global programs at the World Bank Institute, a knowledge-sharing and training arm of the bank. “It begins to challenge these long-held popular notions — that the rich world has reached nirvana in governance.”
The World Bank was mired in a governance scandal of its own this year when its president, Paul D. Wolfowitz, faced charges of favoritism for his companion, who worked at the bank. Mr. Kaufmann was one of a handful of bank officials who wrote a tough letter in April saying that the crisis was a test of the bank’s commitment to high standards of governance. About 800 of the bank’s 13,000 staff members signed it. Mr. Wolfowitz, who had made corruption his signature issue, resigned in May.
Mr. Kaufmann said countries rightly asked the bank: “What right do you have of rating the world when you first have to rate yourselves? It has to start at home.”
The database, compiled from information provided by 30 organizations, is itself a measure of the bank’s evolution on the centrality of governing — not just in its most obvious dimensions of corruption and electoral democracy, but in respect for civil liberties, press freedom, human rights and government transparency, among others.
Mr. Kaufmann, a Chilean citizen, became a leader of the decade-long endeavor to document the effects of bad governance on economic development and the well-being of poor people. The effort began with the support of James D. Wolfensohn, a former bank president, who in 1996 condemned what he called the “cancer of corruption,” then a largely forbidden subject at the World Bank.
The report, “Governance Matters, 2007: Worldwide Governance Indicators 1996-2006,” was written by Mr. Kaufmann and the World Bank researchers Aart Kraay and Massimo Mastruzzi. It was posted on the Internet at www.govindicators.org. Data came from an ideologically diverse array of groups that included Freedom House, Transparency International, the Heritage Foundation, Reporters Without Borders and the State Department.
“This is the best data source on governance now,” said Steven Radelet, a senior fellow at the Center for Global Development, a Washington research group. “It is of huge importance in development. Ten years ago, there was no data. Fifteen years ago, we didn’t talk about this stuff.”
Such information fuels debate in the field of development, and includes arguments over the chicken-or-egg question of whether prosperity leads to good governing or vice versa. Some of the indicators developed by the bank have been vital to the Millennium Challenge Corporation, a federal agency created in 2004 that dispenses American aid to poor countries based on how well they are governed.
A booklet that accompanied the report said that the data undermined what it called “Afro-pessimism.”
“The governance indicators can be used to challenge simplistic, and often negative, generalizations about a whole continent, revealing instead a rich variation across countries,” it said.
Beyond Africa, the report documents how other countries have progressed or regressed. Those making significant gains included Indonesia, Ukraine, Colombia, Turkey and Afghanistan. The backsliders included Bangladesh, Poland, Kyrgyzstan, Moldova and Pakistan.
The report found that the gains and losses balanced out such that the average quality of governance worldwide over the past decade was little improved.

Copyright 2007 The New York Times Company