What is corruption and anti- corruption? Global perspectives on costs of corruption and anti-corruption approaches Jesper Johnsøn, U4

Costs of corruption What type of corruption, what type of cost? – Bribery reducing foreign direct investment, rent-seeking limiting competition, leakage/waste reduces state revenue – Grand corruption impact on social contract and state-formation, electoral corruption, broken accountability – Unfair social dynamics created by petty corruption + self-serving elites – corruption hurts the poor disproportionately Economic costs Political costs Social, individual costs

A few global cost quotes… Globally estimated US$ 1 trillion paid in bribes Tackling corruption, improving governance and rule of law could increase per capita income 400% Increase in corruption index by one point acts as 7.5% tax increase, reducing FDI inflows US$ 197 billion illicit financial flows from 48 poorest developing countries into developed countries Corruption is associated with reduced trust in political institutions 16/20 countries in the bottom CPI are in conflict - citizens of conflict-affected states often view corruption as an important source of insecurity and conflict

Illustrative examples of local costs and anti- corruption benefits Indonesia – village roads – audits reduced missing expenditures by 8% - CBA = $245/village Argentina – hospital procurement – prices decrease 10% after crackdown (audits) Uganda – education – access to information and budget tracking reduces leakage from 80% in 1995 to 20% in 2001 India – education – formal monitoring reduces absenteeism from 42% to 21%. Test scores improve. Uganda – health – community monitoring reduces child deaths by 33% Brazil – elections – access to information + auditing lowers re- election rates for corrupt local officials Control, monitoring and sanctions Access to information, media, whistle- blowing

Basics of anti-corruption continued – the policy level Four general characteristics have traditionally been identified as facilitating corruption: Monopoly of power Wide discretion Lack of transparency in decision-making Weak checks-and-balances for decision-making Anti-corruption approaches designed to counter such facilitating factors

National Integrity System

Multi-Pronged Approach – Accountability linkages

United Nations Convention Against Corruption

Does anti-corruption work?