1. Slide 1 The World Bank Francesc Recanatini & Colum Garrity Drilling Down Through Selected Governance Diagnostic Tools Francesca Recanatini Sr. Economist & Colum Garrity, Public Sector Specialist Public Sector Governance The World Bank Presented at the “Controlling Corruption and Improving Governance for Thailand” Sept. 9, 2008 - The Ellipse Room

2. Slide 2 The World Bank Francesc Recanatini & Colum Garrity Objective of this session  Which empirical tools and approaches are already available?  How can we select among them?  How can such assessments be used for our operational work? Which governance tools are more operationally relevant for our work?

3. Slide 3 The World Bank Francesc Recanatini & Colum Garrity Governance is the door to anticorruption The manner in which the state acquires and exercises its authority to provide public goods & services Use of public office for private gain Governance Corruption Corruption is an outcome – a consequence of weak or bad governance Governance reform helps combat corruption by addressing its underlying causes

4. Slide 4 The World Bank Francesc Recanatini & Colum Garrity Existing WB Empirical Tools  BEEPS  IGR  Public Official surveys  PER and PETS  QSDS  Score Cards  Investment Climate Surveys  EC Audits  CFAA  CPAR  GAC  Case Studies  HIPC Exp. Tracking  ROSC  Life In Transition Survey (ECA region)

5. Slide 5 The World Bank Francesc Recanatini & Colum Garrity Existing Non Bank Tools (Sample)  TI Perceptions Index  UNDP GAC  Freedom House Press Freedom Indicators  MCC ratings  Afrobarometer Surveys  Global Risk Service  Business Enterprise Environment Survey  Latinobarometro Surveys  Media Sustainability Index  Business Risk Service  Transition Report  Global E-Governance  Global Competitiveness  Global Integrity Index  Human Rights Database  Open Budget Initiative  Reporters w/o Borders  Public Affairs Center’s Score Cards

6. Slide 6 The World Bank Francesc Recanatini & Colum Garrity Key starting points 1. What is the purpose of the assessment?  Research and analysis  Awareness raising  Policy and Action planning  Capacity building  Monitoring

7. Slide 7 The World Bank Francesc Recanatini & Colum Garrity 2. What is the focus of the assessment?  Governance as a whole  Corruption  Performance of a specific agency/sector  Quality of a specific public service delivered Key starting points

8. Slide 8 The World Bank Francesc Recanatini & Colum Garrity Linking the Tools to State Institutions PER HIPC E.T. ROSC CPAR EC Audits CFAAIGR & GAC & Governance Cross- Country Ind. BEEPS & INVEST. CLIMATE SCORE CARDS QSDS Public Official Surveys PETs

9. Slide 9 The World Bank Francesc Recanatini & Colum Garrity Linking Governance Tools to Accountability Citizens Politicians/Policymakers PublicServants Delegation Delegation/Voice PoliticalAccountability Internal Accountability Delegation of Implementation public goods/ services client power/ social accountability PETs GAC; BEEPS; PETs Scorecards Doing Business

10. Slide 10 The World Bank Francesc Recanatini & Colum Garrity Monitoring CAS Operations & Capacity building Actionable indicators: PFM indicators (including PEFA, CPAR and CPAA); scorecards; Doing Business; GACs; BEEPS Political Governance Diagnostics; GAC Diagnostics, LITS Specialized technical reports: BEEPS; PETs; IGRs; GSDS; ICAs; PERs: GACs Linking Governance Tools to Accountability

11. Slide 11 The World Bank Francesc Recanatini & Colum Garrity Governance tools for operational work Four examples:  Public Expenditure Tracking Surveys  BEEPS  Governance and Anti-Corruption Diagnostic Surveys  Human Resource Management Tools

12. Slide 12 The World Bank Francesc Recanatini & Colum Garrity Goal: Assess fiscal leakages given significant share of intended resources do not reach the frontline CountryYearSampleLeakage Estimate Ghana2000200 Clinics 80 % Non-Salary Ghana2000200 Schools 49 % Non-Salary, 35% Salary (primary) 52% Non-Salary, 25% Salary (secondary) Honduras2000805 staff; 35 Clinics 2.4% of all workers on the payroll considered ‘ghosts.’ Absenteeism estimated at 27%. 5.2% of workers were not actually in the assigned post but had moved to other location (5.2%) Madagascar2003185 Schools 8-10% of cash transfers Source: World Bank (2005) PETS Review Public Expenditure Tracking Surveys (PETS)

13. Slide 13 The World Bank Francesc Recanatini & Colum Garrity Papua New Guinea 2002214 Schools 16-29% of subsidies Peru2001120 municip. Leakage in ‘Glass of Milk’ program estimated at 71% (includes ‘leakage’ of benefits at household level) Tanzania199936 Clinics Leakage of non-salary funds estimated at 41% Tanzania199945 Schools Leakage of non-salary funds estimated at 57% Uganda2000155 Clinics Leakage of specific drugs and supplies estimated at 70% Uganda1999250 Schools 83% in 1993, 22% in 1996 Goal: Assess fiscal leakages given significant share of intended resources do not reach the frontline Public Expenditure Tracking Surveys (PETS)

14. Slide 14 The World Bank Francesc Recanatini & Colum Garrity The PETS Cycle The Prototype: Uganda Education PETS  Remains Most Successful Case  “Leakages” of Funds Going to Schools Reduced Significantly (~ 13% (1996) to 82 % (1999)  Methodologically Relatively Straightforward Flow Central Government Disbursed Capitation Grant to Districts, Districts On-ward disburse to Schools. Allocations Largely Reached Districts, But Allocations Did Not Reach Facilities

15. Slide 15 The World Bank Francesc Recanatini & Colum Garrity PETS Coverage PETS have now been conducted in over 30 countries, almost exclusively in health and education. Source: Chaudhury, N et. al. 2004 CountryYear EducationHealthWaterTransport/ Roads Agriculture/ Rural Albania2004 Azerbaijanplanned Cambodiaplanned Cameroon2003 Ghana2000 Honduras2000 Madagascar2003 Mozambique2001 PNG2002 Peru2001 Rwanda2000 2004 Senegal2002 Tanzania1999 2001 2003 (pilot) Uganda1996 1999 Zambia2001

16. Slide 16 The World Bank Francesc Recanatini & Colum Garrity  Is corruption in Eastern Europe and the former Soviet Union getting better or worse?  What explains the changes?  What motivates reform?  Are there lessons for other regions? Goal: Analyze how corruption, regulatory burden, and public sector factors affect the business environment “Business Environment and Enterprise Performance Survey” (BEEPS)

17. Slide 17 The World Bank Francesc Recanatini & Colum Garrity “Business Environment and Enterprise Performance Survey” (BEEPS)  Joint initiative with EBRD  20,000 firms in 3 rounds (1999, 2002, 2005)  26 transition countries  6 European comparators in ‘05: Ireland, Germany, Greece, Portugal, Spain, Turkey (+ Korea and Vietnam)  Focus on corruption in enterprise-state interactions

18. Slide 18 The World Bank Francesc Recanatini & Colum Garrity BEEPS Results Corruption is falling for the region as a whole (though not yet to W.Europe levels)

19. Slide 19 The World Bank Francesc Recanatini & Colum Garrity … more in some countries than others … Bribe Frequency, 2002-2005 BEEPS Results

20. Slide 20 The World Bank Francesc Recanatini & Colum Garrity … and not all sectors saw improvement. BEEPS Results

21. Slide 21 The World Bank Francesc Recanatini & Colum Garrity Governance and A-C diagnostic surveys  A demand-driven process to improve governance and build local capacity  Key features: Three surveys: households, firms, and public officials Questions focus both on experience and perceptions Questions are tested and adapted to local realities Rigorous technical requirements in implementation Local institution implements, with guidance from international experts Goal: Greater local capacity, baseline governance data, & action plan for policy reform

22. Slide 22 The World Bank Francesc Recanatini & Colum Garrity The power of diagnostic data and key dimensions for analysis:  Unbundle corruption – administrative, state capture, bidding, theft of public resources, purchase of licenses  Identify weak and strong institutions  Assess the costs of corruption on different stakeholders  Identify key determinants of good governance  Input to develop concrete policy recommendations Governance and A-C diagnostic surveys

23. Slide 23 The World Bank Francesc Recanatini & Colum Garrity 1. Establishment of Steering Committee 2. Diagnostic surveys + analysis 3. Draft of the NAS 4. Public dissemination + discussion 5. Revision of the NAS 6. Implementation by Government 7. Monitoring and Evaluation of NAS Challenge: poor governance and corruption WBI Technical Assistance Key Partnership: Government + Civil Society Country Implemented The study as part of a larger process CAPACITY BUILDING Local firm collects data Local enumerators trained Local supervision by technical cmte. Collects EXPERIENCE & PERCEPTIONS data from service USERS & PROVIDERS (3 sources) End WB T.A.

24. Slide 24 The World Bank Francesc Recanatini & Colum Garrity Country Survey Instruments Data CollectionReportDisseminationA-C Strategy Benin Finalized in 2005 Completed, 2006 In Progress (Summer 2007) Pending Haiti Finalized in 2005 Completed, 2006 Completed (release May/June 2007) Planned Summer 2007 Pending Malawi (Completed independently by Country) Completed (w/WB) February 2006 In Progress KenyaUnder review Pending (Summer 2007) Pending Mauritani a In Development Pending (Summer 2007) Pending El Salvador In Development Pending (Fall 2007) Pending BurundiFinalized 2007 Pending (Summer 2007) Pending Governance and Anti-Corruption Diagnostics 2006-2007

25. Slide 25 The World Bank Francesc Recanatini & Colum Garrity Country Diagnostic Results Extent of corruption, (Selected Countries ‘03-’05)

26. Slide 26 The World Bank Francesc Recanatini & Colum Garrity Corruption penalizes especially the poorest citizens Corruption penalizes especially the poorest citizens (% of monthly income paid for bribes as reported by households who sought a public service, 2000- 2005) Country Diagnostic Results

27. Slide 27 The World Bank Francesc Recanatini & Colum Garrity Managers and bribes to obtain public services, Managers and bribes to obtain public services, Guatemala 2004 Note: Thin lines represent margins of error (95% confidence intervals) for each value. They show the range where the true (population) proportion would lie with probability 0.95 if we had drawn a random sample from this population. Figures are calculated for those managers who contacted the agency btwn July ‘03 and July ‘04. Selected services. Country Diagnostic Results

28. Slide 28 The World Bank Francesc Recanatini & Colum Garrity Cost of corruption, by firm size Cost of corruption, by firm size (as reported by managers, Guatemala 2004) Note: Figures are calculated for those enterprises that sought attention at the institution between July 2003 and July 2004. Services selected out of 12 for which data are available. Country Diagnostic Results

29. Slide 29 The World Bank Francesc Recanatini & Colum Garrity Country Diagnostic Results Corruption imposes barriers to households to access basic services, Corruption imposes barriers to households to access basic services, Sierra Leone 2003 Sierra Leone Roads Transport Authority

30. Slide 30 The World Bank Francesc Recanatini & Colum Garrity Practice of Purchasing Jobs Practice of Purchasing Jobs (as reported by public officials, Zambia 2003) % of public officials reporting purchase of jobs is a very common practice among... Country Diagnostic Results

31. Slide 31 The World Bank Francesc Recanatini & Colum Garrity % of Public Officials that said irregularities/(misappropriations) are frequent Public funds are mismanaged by agency Public funds are mismanaged by agency (as reported by Public Officials, Sierra Leone, 2003) Country Diagnostic Results

32. Slide 32 The World Bank Francesc Recanatini & Colum Garrity SouthNorthEastWestWHOLE Prov. AreaCOUNTRY Corruption in budget3543483940 Overall corruption2232353332 Corruption in public contracts1835293330 Corruption in personnel (2)3944555349 Accessibility for poor8574877478 Audit Mechanisms55596658 Enforcement of rules7067807371 Politicization2134223432 Quality of rules62 706163 Resources5451475552 Transparency5155535155 Citizen voice70596566 Meritocracy6665706968 Governance and corruption indicators by province, Sierra Leone, 2003

33. Slide 33 The World Bank Francesc Recanatini & Colum Garrity Government Employment, as % of population Early 1990s Source: World Bank Policy Research Working Paper No 1806 0.9 1 1.2 1.4 1.8 0.3 0.7 0.8 0.7 0.9 2.5 0.8 1 5.1 1.1 1.6 3.4 0 1 2 3 4 5 6 7 8 9 AfricaAsiaECALACMENAOECD Percentage of population Central GovernmentLocal GovernmentTeaching and Health

34. Slide 34 The World Bank Francesc Recanatini & Colum Garrity Central Government Wages & Salaries Early 1990s Source: World Bank Policy Research Working Paper No 1806

35. Slide 35 The World Bank Francesc Recanatini & Colum Garrity Human Resource Management 1. Attract and retain required staff 2. Fiscally sustainable wage bill 3. Depoliticized, meritocratic HRM practices 4. Ethical behavior 5. Performance-focusing HRM practices 6. Effective working relationships with other cadres Six key objectives

36. Slide 36 The World Bank Francesc Recanatini & Colum Garrity Design and Implementation Features: Rules  Attract and retain required staff Remuneration policies and practices, including pension policies and practices Non-remuneration policies and practices Policies and practices for attracting and retaining staff in unattractive locations  Fiscally sustainable wage bill Establishment control policies and practices Wage bill control policies and practices

37. Slide 37 The World Bank Francesc Recanatini & Colum Garrity Design and Implementation Features: Rules (cont.)  Depoliticized, meritocratic HRM practices Recruitment and selection policies and practices (entry vs. non-entry level)  Competition  Criteria  Screening procedures  Decision steps (long-listing, short-listing, final selection) Equal opportunity policies and practices (if applicable) Disciplinary procedures and practices Redress mechanism  Ethical behavior Conflict of interest requirements Code of ethics Asset declaration requirements

38. Slide 38 The World Bank Francesc Recanatini & Colum Garrity ObjectiveRationaleIndicator Merit-based civil service (CS) management Competition in recruitment and selection Competitive recruitment and selection procedures enhance transparency, fairness and the odds of merit-based CS management practices % of CS vacancies filled through advertised, competitive procedures Effective performance evaluation practices Performance evaluations are a necessary but not sufficient condition for merit- based CS management practices that link some rewards to performance. % of CS staff for whom annual performance evaluations were completed Variance in performance evaluations is a necessary but not sufficient condition for an effective performance evaluation process. % of CS performance evaluations falling in highest rating category Merit Based Civil Service Management Source: The World Bank, Gary Reid (2007)

39. Slide 39 The World Bank Francesc Recanatini & Colum Garrity Albania: Meritocratic CS Management IndicatorPre- or early reformMost recently % of CS vacancies filled through advertised, competitive procedures 70% (2002) 94% (2004) % of CS staff for whom annual performance evaluations were completed 0% (2000) 88.6% (2004) % of CS performance evaluations falling in highest rating category 57.8% (2001) 43.2% (2004) Source: The World Bank, Gary Reid (2007)

40. Slide 40 The World Bank Francesc Recanatini & Colum Garrity Design and Implementation Features: Rules (cont.)  Performance-focusing HRM practices Performance accountability of organizational units Personnel performance appraisal policies and practices Promotion policies and practices  Competition  Criteria  Checks Performance-related pay practices Mobility options for certain types of positions

41. Slide 41 The World Bank Francesc Recanatini & Colum Garrity Design and Implementation Features: Rules (cont.)  Effective working relationships with other cadres Policies and practices aimed at achieving clear differentiation in roles, responsibilities, authority and accountabilities Policies and practices aimed at ensuring buy-in to those differentiations

42. Slide 42 The World Bank Francesc Recanatini & Colum Garrity To sum: a few salient lessons  Governance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C Strategy  Transparency and public dissemination of the results are key  The approach must be participatory at each stage of the process

43. Slide 43 The World Bank Francesc Recanatini & Colum Garrity A Few Salient Lessons, cont.  To unbundle corruption and institutional weaknesses allows to identify key areas for reform  Quality control and use of rigorous analytical methods enhance the credibility of the results

44. Slide 44 The World Bank Francesc Recanatini & Colum Garrity Discussion