A Trio of Perspectives on Corruption: Bias, Speed Money and “Grand Theft Infrastructure”
Drawing upon the freshly expanded World Bank’s Enterprise Survey (ES), Kenny, Klein and Sztajerowska present an original paper examining three themes: corruption measurement pitfalls, corruption as efficient grease, and corruption in infrastructure. The Enterprise Survey now covers 125 countries and provides interesting insights, depicting an alternative picture from Transparency Internaional’s CPI or the World Bank’s Doing Business data – the latter portraying a de jure description of firm's environment, focusing on the institutional background.
The first section of this paper presents an up-to-date literature survey regarding the hazards in corruption measurement. The authors spend some time on the Corruption Perception Index (CPI), reminding readers of its advocacy / public awareness perspective. They underline the CPI’s lack of precision – i.e. aggregated data / multi-sectoral - as a policy-making tool. Nevertheless, Kenny, Klein and Sztajerowska show that broadly speaking, World Bank’s ES and Transparency’s CPI provide a similar picture of the corruption scourge. However, two outliers arise -China and India - questioning the existence of biases in both of these measurement attempts.
The second section of this paper probes firm level corruption measurement, comparing the World Bank’s Doing Business (DB) results to the Enterprise Survey’s findings. Elaborating on Hallward-Driemeyer and Pritchett (2010), the authors attempt to disentangle the “speed money” issue, comparing the de jure vs. de facto business environment, questioning whether the ES’ reported corruption might explain the gap between official and actual time requirements for business registration, construction licenses, import licenses, etc. The authors discover an intriguing two-fold pattern: longer official time requirements seem to be associated with more frequent bribe payments, whereas higher percentages of bribes correlate with lower actual time.
The last section questions the assumption that infrastructure service delivery is more affected by corruption because of its monopoly market structure. However, Kenny, Klein and Sztajerowska reject this hypothesis. Based on data on price-cost gaps, the authors find that infrastructure ventures in power and water typically charge prices below cost in developing countries, not high monopoly prices. They posit that the problem is not the value of bribes, but rather the choice of inefficient and uneconomic projects that bribes enable.
Overall, this paper draws our attention as it utilizes newly collected data while proposing an original research venue on three distinct themes in a policy-making perspective.
Citation: C. Kenny et al., “A Trio of Perspectives on Corruption, Bias, Speed Money and “Grand Theft Infrastructure””, World Bank Policy Research Working Paper no. 5889, 2011
Del.icio.us
Facebook
Twitter
Digg
