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 1990-2008• 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 sanctionsAccess to

information, media, whistle-

blowing

Basics of anti-corruption continued – the policy levelFour 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?