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Evidence-based reflections on Corruption & Natural Resource Governance
Daniel KaufmannPresident & CEO, NRGI
At the Norad Policy Forum on Natural resource management and corruption – the role of
transparency
Oslo, October 8, 2019
Voice & Accountability 2018 (WGI)
Source: Worldwide Governance Indicators (www.govindicators.org). Kaufmann, D., A. Kraay, & M. Mastruzzi (2010), The Worldwide
Governance Indicators: Methodology and Analytical Issues, World Bank Policy Research Working Paper No. 5430.
Control of Corruption 2018 (WGI)
Source: Worldwide Governance Indicators (www.govindicators.org). Kaufmann, D., A. Kraay, & M. Mastruzzi (2010), The Worldwide
Governance Indicators: Methodology and Analytical Issues, World Bank Policy Research Working Paper No. 5430.
Control of Corruption 2000 & 2018 (WGI):Resource Rich vs. Non-Resource Rich Developing Countries
Good
Poor
Source: Worldwide Governance Indicators (www.govindicators.org). Kaufmann, D., A. Kraay, & M. Mastruzzi (2010), The Worldwide
Governance Indicators: Methodology and Analytical Issues, World Bank Policy Research Working Paper No. 5430. IMF: Resource Rich.
-1.25
-1.05
-0.85
-0.65
-0.45
-0.25
-0.05
0.15
0.35
0.55
0.75
Resource-rich Non Resource-rich
2000 2018
Base sample has 137 developing countries, of which country groupings include Resource-rich (79), Non Resource-rich (58).
5
The 3-to-1 Development Dividend From Improving Governance & Controlling Corruption
High Corruption Medium Corruption Low Corruption
$300
$3,000
$30,000
Data Source for calculations: KK 2004. Y-axis measures predicted GDP per capita on the basis of Instrumental Variable (IV) results for each of the 3 categories. Estimations based on various authors’ studies, including Kaufmann and Kraay.
The large development dividend of controlling corruption: Resource Rich countries vs. Others
Sources: GDP per capita (atop each column) from World Bank World Development Indicators, 2012.Corruption Control data from Worldwide Governance Indicators (WGI, 2012) Countries grouped into terciles based on WGI Control of Corruption scores. Resource Rich country classification according to IMF (2010).
Poor Corruption Control Average CorruptionControl
Good CorruptionControl
GD
P p
er
ca
pit
a (
PP
P)
Resource-Rich Countries Non Resource Rich
5,000
0
10,000
6,851
3,941
12,712
10,272
45,000
30,820
6
Share of Poor in
Resource Rich
Countries:20%
Share of Poor in
Non-Resource
Rich Countries:
80%Share of Poor in
Resource Rich
Countries: 50%
Share of Poor in Non-
Resource Rich
Countries:50%
Share of the # of Poor living under $2.00 a day in Non-Resource Rich Countries vs. Resource Rich Countries, 1990 & 2030
1990
2030
7
Close link between WEF Global Competitiveness (2018) &
WGI Control of Corruption (2017)
8Source: Worldwide Governance Indicators (http://www.govindicators.org) and World Economic Forum Global Competitiveness Report 2018 (https://www.weforum.org/reports/the-global-competitveness-report-2018)
Australia
China
Hong Kong
Indonesia
Japan
Cambodia
South Korea
Laos
Mongolia
Malaysia
New Zealand
Philippines
Singapore
Thailand
Taiwan
Vietnam
South Africa
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
30 40 50 60 70 80 90
Co
nro
l o
f C
orr
up
tio
n I
nd
icato
r S
co
re
Global Competitiveness Indicator Score
r = 0.83
Sovereign Bond % Yield vs WGI (Composite) Indicator: The ‘1,000 basis points dividend of good governance’
Argentina
Australia
AustriaBelgium
Botswana
Brazil
Bulgaria
Canada
ChileChina
Colombia
CroatiaCzech Republic
Denmark
Egypt, Arab Rep.
FinlandFranceGermany
Greece
Hong Kong SAR, ChinaHungary
Iceland
India
Indonesia
Ireland
IsraelItaly
Japan
Kenya
Korea, Rep.
Lithuania
Malaysia
Mexico
Netherlands
New Zealand
Norway
Pakistan
Philippines
Poland
Portugal
QatarRomania
Russian Federation
Singapore
Slovenia
South Africa
SpainSweden
Switzerland
Taiwan, China
Thailand
Turkey
Uganda
United Kingdom
United States
Vietnam
0
2
4
6
8
10
12
14
16
-1.50 -1.00 -0.50 0.00 0.50 1.00 1.50 2.00
20
18
So
ve
reig
n B
on
d %
Yie
ld
2016 Worldwide Governance Indicator Score
r = -0.73
Sovereign Bond % Yield is obtained from countries’ 10-year bonds as of February 14, 2018.
Source: Worldwide Governance Indicators, available at: www.govindicators.org and 10-Year Government Bond Spreads, available at:
www.investing.com/rates-bonds/government-bond-spreads.
9
10
Costs of State Capture – Private Sector grows and invests less
0
5
10
15
20
25
30
High capture Countries Low capture countries
Ave
rage
rat
e o
f g
row
th '9
7-'
99
Output Investment
AFG
ALB
ARG
ARM
BFA
CAF
CIV
CMR
COG
COL
DEU
DOM
ETH
GBR
GHA
GIN
GTM
GUY
HND
IDN
IRQ
KAZ
KGZLBR
MDGMEX
MLIMMR
MNG
MOZMRTMWI
NGA
NLDNOR
PERPHL
PNG
SEN
SLE
STP
SUR
SYC
TCD
TGO
TJK
TMP
TTOTZA
UKR
ZAR
ZMBALB
ARGBFA
CIV
CMR
COG
COL
DOM
GHA
GIN
GTM
HND
IDN
IRQ
KAZ
LBRMDG
MEX
MLI
MNG
MOZMRTMWI
NGA
NOR
PERPHL
PNG
SEN
SUR
TCD
TGO
TTOTZA
UKR
ZAR
ZMB
-2.50
-2.00
-1.50
-1.00
-0.50
0.00
0.50
1.00
1.50
2.00
2.50
-2.50 -2.00 -1.50 -1.00 -0.50 0.00 0.50 1.00 1.50 2.00 2.50
Co
ntr
ol o
f C
orr
up
tio
n In
dic
ato
r Sc
ore
Voice and Accountability Indicator Score
Resource Rich EITI BOTH
r = 0.78
Voice and Accountability & Control of Corruption 2018 (WGI)
Source: Worldwide Governance Indicators (www.govindicators.org). Kaufmann, D., A. Kraay, & M. Mastruzzi (2010), The Worldwide
Governance Indicators: Methodology and Analytical Issues, World Bank Policy Research Working Paper No. 5430. IMF: Resource Rich. EITI: Countries on EITI.
Squares represent countries that have joined EITI. Dots represent all remaining countries, including those who are resource-rich colored in red.
14
-1.5
-1
-0.5
0
0.5
1
No Freedom/Rights Some Freedom/Rights Satisfactory
Freedom/Rights
Press Freedom / Women's Rights / Transparency
Cont
rol o
f Cor
rupt
ion
Press Freedom Gender Equality Transparency
Good
Freedom of the Press, Gender Rights & Transparency are
Associated with Corruption Control (Emerging Economy sample-- 135 countries)
Source for Control of Corruption: : 'Governance Matters IV: Governance Indicators for 1996-2004’, Kaufmann, D., A. Kraay and M. Mastruzzi,
(http://www.worldbank.org/wbi/governance/govdata/); Source for Press Freedom: Freedom House. Source for Gender Equality: CPIA 2004. Source for Transparency:
Transparenting Transparency”, A. Bellver and D. Kaufmann. Satisfactory Freedom/Rights reflect higher ratings from Press Freedom, women’s rights, gender equality and
transparency ratings.
Older EITI sample covers the 28 emerging EITI countries that were members as of 2011. EITI Newcomers sample covers the 19 emerging EITI countries who joined between 2009 and 2017. A conservative assumption is used for countries missing data in EITI+2 (11 countries) by using the data from the last year with available data. Number of countries with actual data per period are as follows: EITI (47 countries), EITI+1 (47 countries), EITI+2 (43 countries), EITI+3 (42 countries), EITI+4 (41 countries), EITI+5 (36 countries).
-0.8
-0.7
-0.6
-0.5
-0.4
-0.3
-0.2
-0.1
EITI-5 EITI-4 EITI-3 EITI-2 EITI-1 EITI EITI+1 EITI+2 EITI+3 EITI+4 EITI+5
Go
vern
ance
Ind
icat
or
Sco
re (
EITI
)Older entrants (28) vs. Newcomers (19) – Cutoff: 2011
Older EITI EITI Newcomers
Voice & Accountability pre- & post-EITI candidacy
Source: Worldwide Governance Indicators (www.govindicators.org). Kaufmann, D., A. Kraay, & M. Mastruzzi (2010), The Worldwide
Governance Indicators: Methodology and Analytical Issues, World Bank Policy Research Working Paper No. 5430. EITI: Countries and joining date on EITI.
Older EITI sample covers the 28 emerging EITI countries that were members as of 2011. EITI Newcomers sample covers the 19 emerging EITI countries who joined between 2009 and 2017. A conservative assumption is used for countries missing data in EITI+2 (11 countries) by using the data from the last year with available data. Number of countries with actual data per period are as follows: EITI (47 countries), EITI+1 (47 countries), EITI+2 (43 countries), EITI+3 (42 countries), EITI+4 (41 countries), EITI+5 (36 countries).
-1
-0.9
-0.8
-0.7
-0.6
-0.5
EITI-5 EITI-4 EITI-3 EITI-2 EITI-1 EITI EITI+1 EITI+2 EITI+3 EITI+4 EITI+5
Go
vern
ance
Ind
icat
or
Sco
re (
EITI
)Older entrants (28) vs Newcomers (19) - Cutoff: 2011
Older EITI EITI Newcomers
Control of Corruption pre- & post-EITI candidacy
Source: Worldwide Governance Indicators (www.govindicators.org). Kaufmann, D., A. Kraay, & M. Mastruzzi (2010), The Worldwide
Governance Indicators: Methodology and Analytical Issues, World Bank Policy Research Working Paper No. 5430. EITI: Countries and joining date on EITI.
| WWW.RESOURCEGOVERNANCEINDEX.ORG
2017 Resource Governance Index country scores and rankings
17
| WWW.RESOURCEGOVERNANCEINDEX.ORG
State-owned enterprises assessed in the RGI
18
Source: OECD 2017 Survey of anti-corruption and integrity in SOEs.
Corruption & related irregular practices in SOEs, by sector (Survey by OECD)
EITI & the Anti-Corruption Agenda• Achievements: Dialogue, Data, Civil Society Protections, some
Accountability. Board focus now (with NRGI, Norway support)
• Ahead: For legitimacy of the initiative: Open & Concrete
1. Diagnostics: Incentives for countries to assess and address corruption & capture risks -- at outreach/sign-up, MSG workplans; validation
2. Safeguarding Civil Society Protections -- fundamental
3. Companies stepping up -- including MNC majors & SOEs
4. Service Contracting (following progress on traders)
5. Energy Transition – corruption an obstacle
6. Partnerships: EITI about transparency - hence partners: OECD, IMF, Norway/bilaterals; NRGI, CSOs, researchers -- Political
Thank you