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Corruption and the MDGs

In 2000 more than 180 countries committed to a set of highly visible development priorities to be achieved by 2015. Known as the Millennium Development Goals (MDGs) these eight priorities cover a broad range of critical development issues ranging from poverty reduction, health and education to gender equality, access to clean water and environmental sustainability. By setting numerical targets for related indicators, the MDGs have evolved into a galvanising point for development research to identify the critical conditions and drivers that shape progress, or the lack thereof for specific development goals. This research agenda is more urgent and important than ever. With five years to go to the 2015 target date, progress reports indicate that achievements in many areas are not on-track and the world community is likely to fall short of its commitments.

The extent to which corruption negatively affects the prospects of achieving the MDGs is a key area of empirical inquiry and there is a growing number of research contributions that speak to different aspects of that question. Given the breadth and diversity of the MDGs, it is not surprising that few empirical studies attempt a sweeping exploration of the corruption-MDG relationship. Instead, the related empirical literature and research landscape consists of a wide array of very different contributions.

 A comprehensive appraisal of this vast body of literature is beyond the scope of this brief review. It will focus instead on a few contributions that are illustrative of the breadth and depth of the field and that cover two MDG areas where progress has been particularly slow: primary education and maternal health.

 

Corruption and education

Estimating leakage rates in financial flows as a marker of mismanagement and corruption is difficult, yet an innovative approach, a public expenditure tracking survey (PETS) was first pioneered in Uganda in 1996 to shed some light on corruption in the education sector. The survey collected five years’ data on spending and service outputs in 250 government primary schools, 18 local governments and three central government ministries.

The findings were devastating: on average 87% of non-wage education funds were captured by local officials for purposes unrelated to their intended use, while schools in poor neighbourhoods received even less of the planned funding.(1) PETS has since been repeated in countries such as Peru, Ghana, Tanzania and Zambia, and consistently documents significant leakage rates.(2)

For a unique view on the linkages between leakage rates and student achievement at the community level, Ferraz et al. draw on extensive audit data from Brazil’s local governments and link these to data on educational performance for more than 1400 schools in 365 municipalities. Econometric tests on this rich and unique dataset suggest that higher levels of resource leakage at the local level are associated with lower learning gains for students.(3)

The direct observation of teacher attendance through unannounced visits has evolved into a popular research technique to measure absenteeism; a key form of quiet corruption.  In Uganda, two rounds of investigations based on this methodology found teacher absence rates of 27% in 2002 and in 2007 only marginally lower at 20%.(4)

Moving from tracking the impact of corruption to exploring the effects of anti-corruption measures, in 2008 Transparency International collected community-level data on education, school management and school performance drawn from more than 300 schools in six African countries. The findings reveal that schools that are accountable to parents, school management committees and other government bodies are likely to be better run. When the management of schools is considered in more detail, the findings also suggest that there is a positive relationship between accountability and a school’s performance.(5)

 

Corruption and health

Sample quality checks on health products such as drugs provide insight into another form of hidden corruption: the production of substandard products and services.  According to some studies, more than 50% of drugs sold in drugstores in Nigeria in the 1990s were found to be counterfeit.(6)

Empirical studies based on direct observation also identify absenteeism as a significant problem in the health sector, mirroring findings in the education sector. An investigation by Banerjee et al. in Rajasthan, India in 2004 stands out as particularly comprehensive. It relied on weekly, unannounced visits over a one-year-period to a sample of more than 140 rural health facilities. The authors found a staggering average absence rate of 36% in larger primary care centres and an even higher 45% in rural subcentres.(7)

The theft of health equipment and medicines to pocket the gains from illegally selling these products on the black market presents another major corruption challenge. The practice is widespread in many countries and a qualitative survey of 50 health workers in Mozambique and Cape Verde concluded that this theft is institutionalised: corrupt health workers enter into quasi contracts with private health clinics that purchase the stolen goods.(8)

Can accountability, transparency and integrity make a difference? Several studies shed light on this important question. Rajkumar and Swaroop find that the effectiveness of public health spending in reducing child mortality depends crucially on the perception of higher government integrity.(9) Bjorkman and Sevensson examine the empirical impact of citizen report cards, an important social accountability tool. They probe this issue with the help of a randomised field experiment in Uganda, an approach that is increasingly gaining traction in development research. The results are impressive. Using report cards increased both the level of health service utilisation and provider attendance, and consequently reduced infant mortality by one-third, increasing birth weight and improving other health outcomes.(10)

 

Better data for better development

These findings are not only very interesting from a research perspective, but are also highly policy-relevant. Understanding how corruption intersects with key priorities in development and how transparency, accountability and integrity can serve as important principles to make MDG related interventions more effective provide timely guidance for policy-makers.

The growing body of empirical inquiry in this area also highlights the research agenda ahead: we need to know much more about what works and what does not in tackling corruption in the context of the MDGs. An important step will be to collect more and better data. It is distressing in this context that the official assessments of MDGs progress in 2010 are often forced to rely on 2005 data, suggesting serious shortcomings in data availability, reliability and timely compilation. Better prioritisation of policy interventions for reaching the MDGs starts with better data. The empirical evidence so far from the growing literature on the relationship between corruption and the MDGs seems robust and conclusive: corruption has a demonstrable negative impact on MDG achievement and the integration of transparency and accountability measures into development programming is likely to yield an MDG dividend.

 

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References

1.   R. Reinikka, “Recovery in service delivery: Evidence from schools and health centers”,  in R. Reinikka and P. Collier (Eds.), Uganda’s recovery: The role of farms, firms, and government. World Bank Regional and Sectoral Studies (Washington, DC: World Bank, 2001).

2.       The related studies are summarised and referenced in R. Reinikka and J. Svensson, “Using Micro-Surveys to Measure and Explain Corruption”, World Development, 34(2), 2006.

3.       C. Ferraz et al., “Corrupting Learning: Evidence from Missing Federal Education Funds in Brazil”, Paper provided by Department of Economics PUC-Rio (Brazil) in its series Textos para discussão, no. 562, 2009.

4.       N. Chaudhury et al., “Missing in Action: Teacher and Health Worker Absence in Developing Countries”, Journal of Economic Perspectives 20(1): 91–116, 2006; and J. Habyarimana, “The Determinants of Teacher Absenteeism: Evidence from Panel Data from Uganda”, Mimeo, Georgetown University, 2007.

5.       Transparency International, The Transparency Catalyst: Anti-Corruption and the MDGs (Berlin: TI, 2010).

6.       The World Bank, Africa Development Indicators 2010, (Washington, DC: World Bank, 2010).

7.       A. Banerjee et al., “Wealth, Health, and Health Services in Rural Rajasthan” American Economic Review, 94(2):326–30, 2004.

8.   P. Ferrinho et al., “Pilfering for Survival: How Health Workers Use Access to Drugs as a Coping Strategy”, Human Resources for Health, 2(4): 1–6, 2004.

9.       A. S. Rajkumar and V. Swaroop, Public Spending and Outcomes: Does Governance Matter?”, Journal of Development Economics, 86: 96–111, 2008.

10.    M. Björkman and J. Svensson, Power to the People: Evidence from a Randomized Field Experiment of a Community-Based Monitoring Project in Uganda”, World Bank Policy Research Working Paper, no. 4268, 2007.

Author : Dieter Zinnbauer, Transparency International

03 Oct 2010


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