Evidence-based reflections on Corruption & Natural Resource Governance Daniel Kaufmann President & 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 2000 2018 Good 0.75 0.55 0.35 0.15 -0.05 -0.25 -0.45 -0.65 -0.85 -1.05 -1.25 Poor Resource-rich Non Resource-rich Base sample has 137 developing countries, of which country groupings include Resource-rich (79), Non Resource-rich (58). 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.
The 3-to-1 Development Dividend From Improving Governance & Controlling Corruption $30,000 $3,000 $300 High Corruption Medium Corruption Low Corruption 5 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 45,000 Res esou ource rce-Ric -Rich C h Cou ountr ntries Non Non R Res esour urce ce Rich ich 30,820 GDP per capita (PPP) 12,712 10,272 6,851 3,941 10,000 5,000 0 Poor Corruption Control Average Corruption Good Corruption Control Control Sources: GDP per capita (atop each column) from World Bank World Development Indicators, 2012. 6 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).
Share of the # of Poor living under $2.00 a day in Non- Share of Poor in Resource Rich Countries vs. Resource Rich Resource Rich Countries, Countries: 1990 & 2030 20% Share of Poor in Non- Resource Rich Countries: 80% Share of Share of Poor in Non- Poor in 1990 Resource Resource Rich Rich Countries: Countries: 50% 50% 2030 7
Close link between WEF Global Competitiveness (2018) & WGI Control of Corruption (2017) 2.5 New Zealand Singapore Conrol of Corruption Indicator Score 2.0 Australia Hong Kong Japan 1.5 Taiwan 1.0 r = 0.83 South Korea 0.5 Malaysia South Africa 0.0 Indonesia China Thailand Mongolia Philippines Vietnam -0.5 Laos -1.0 Cambodia -1.5 -2.0 30 40 50 60 70 80 90 Global Competitiveness Indicator Score 8 Source: 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)
Sovereign Bond % Yield vs WGI (Composite) Indicator: The ‘1,000 basis points dividend of good governance’ 16 r = -0.73 Egypt, Arab Rep. Uganda 14 2018 Sovereign Bond % Yield Kenya 12 Turkey 10 Brazil Pakistan South Africa 8 Mexico India Russian Federation Colombia Philippines Indonesia 6 Argentina Iceland Romania Chile Greece Botswana Vietnam 4 Qatar Malaysia China Poland New Zealand Australia United States Korea, Rep. Hungary Thailand Canada Singapore 2 Croatia Italy Portugal Israel Hong Kong SAR, China Norway Czech Republic United Kingdom Spain Slovenia Bulgaria Lithuania Ireland Taiwan, China France Belgium Sweden Austria Denmark Finland Germany Netherlands Switzerland 0 Japan -1.50 -1.00 -0.50 0.00 0.50 1.00 1.50 2.00 2016 Worldwide Governance Indicator Score Sovereign Bond % Yield is obtained from countries’ 10 -year bonds as of February 14, 2018. 9 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.
Costs of State Capture – Private S ector grows and invests less 30 Average rate of growth '97-'99 Output Investment 25 20 15 10 5 0 High capture Countries Low capture countries 10
Voice and Accountability & Control of Corruption 2018 (WGI) 2.50 NOR NOR r = 0.78 NLD DEU 2.00 GBR Control of Corruption Indicator Score 1.50 1.00 SYC 0.50 STP SEN SEN ARG ARG BFA BFA GHA GHA 0.00 SUR SUR GUY IDN IDN COL COL TTO TTO ARM MNG MNG TZA TZA TMP ETH KAZ KAZ CIV CIV SLE ALB ALB PER PER PHL PHL MMR HND HND -0.50 ZMB ZMB MLI MLI TGO TGO MWI MWI DOM DOM MOZ MOZ MRT MRT GTM GTM LBR LBR MEX MEX UKR UKR PNG PNG KGZ MDG MDG GIN GIN NGA NGA CMR CMR -1.00 CAF COG COG IRQ IRQ TJK TCD TCD AFG ZAR ZAR -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 Voice and Accountability Indicator Score Resource Rich EITI BOTH Squares represent countries that have joined EITI. Dots represent all remaining countries, including those who are resource-rich colored in red. 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.
Freedom of the Press, Gender Rights & Transparency are Associated with Corruption Control Good (Emerging Economy sample-- 135 countries) 1 Press Freedom Gender Equality Transparency 0.5 Control of Corruption 0 -0.5 -1 -1.5 No Freedom/Rights Some Freedom/Rights Satisfactory Freedom/Rights Press Freedom / Women's Rights / Transparency Source for Control of Corruption: : 'Governance Matters IV: Governance Indicators for 1996- 2004’, Kaufmann, D., A. Kraay and M. Mastruzzi, 14 (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.
Voice & Accountability pre- & post-EITI candidacy Older entrants (28) vs. Newcomers (19) – Cutoff: 2011 -0.1 Governance Indicator Score (EITI) -0.2 -0.3 -0.4 -0.5 -0.6 -0.7 -0.8 EITI-5 EITI-4 EITI-3 EITI-2 EITI-1 EITI EITI+1 EITI+2 EITI+3 EITI+4 EITI+5 Older EITI EITI Newcomers 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). 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.
Control of Corruption pre- & post-EITI candidacy Older entrants (28) vs Newcomers (19) - Cutoff: 2011 -0.5 Governance Indicator Score (EITI) -0.6 -0.7 -0.8 -0.9 -1 EITI-5 EITI-4 EITI-3 EITI-2 EITI-1 EITI EITI+1 EITI+2 EITI+3 EITI+4 EITI+5 Older EITI EITI Newcomers 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). 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.
2017 Resource Governance Index country scores and rankings 17 | WWW.RESOURCEGOVERNANCEINDEX.ORG
State-owned enterprises assessed in the RGI 18 | WWW.RESOURCEGOVERNANCEINDEX.ORG
Corruption & related irregular practices in SOEs, by sector (Survey by OECD) Source: OECD 2017 Survey of anti-corruption and integrity in SOEs.
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