Education: How do we improve services and attainment?

Outline
Topic 1: Introduction to development: Measuring it, how poor live?
Topic 2 (seminar): Basic quantitative research methods using stata
Topic 3: Randomized trials: New hope for development?
Topic 4: Health: Are there successful policies improving health?
Topic 5: Education: How do we improve services and attainment? Topic 6: Microfinance: A development miracle or false promise?
Topic 7: Geography and historical institutions: Predestined to be poor?
Topic 8: Violent conflict: What are the driving forces?
Topic 9: Electing better politicians pro-development: Is it possible?
Topic 10: The political economy of aid: Does aid really help?
Topic 11: Corruption: How to tackle it?
Topic 11: Corruption

Today’s lecture
⦁ How do we measure corruption?
⦁ What are the causes and consequences of corruption?
⦁ Any solutions that actually work?
What is corruption?
The power of public office used for personal gain contravening the
“rules of the game” => misuse of public office for private gain
E.g. bribes, nepotism, buying seat in political offices, buying votes, appropriation of funds allocated to development projects, etc..

Excellent review on topic: Leslie Holmes. 2015. Corruption A very short introduction, Oxford University Press.
SHELVES, JF1525.C66 HOL, MAINLIB Mile End.
Examples too many
⦁ Extrapolating from firm and household survey data, the World Bank Institute estimates that total bribes in a year are about $1 trillion, 3 % of world GDP.
⦁ Turkey, the effect of the earthquake that took thousands of lives in 2004 would have been much less severe, if contractors had not been able to pay bribes to build homes with substandard materials. Same in China in 2009 taking the lives of 5,000 children in earthquake in Sichuan.
⦁ In 1997, former President of Zaire, Mobutu Sese Seko, looted $5 billion, equal to the country’s entire external debt in that year.
⦁ $1 billion of oil revenues vanished from Angolan state coffers in 2001 alone. This amount was about three times the value of the humanitarian aid received by Angola in that year, in a country where 3/4 survives on less than $1 a day.

MPs in UK

1. How do we measure corruption?
How do we measure corruption?
Macro level: perception indices typically constructed from foreign experts’ assessments of overall corruption in the country:
Corruption Perception Index (CPI) by Transparency International: measures the perceived corruption in the public sector.
It is a composite index, a combination of surveys and assessments of corruption collected by a variety of reputable institutions
The index reflects the views of observers from around the world, including experts living and working in the countries and territories evaluated.
It includes 176 countries

Common characteristics of corrupt countries
⦁ Developing or transition economies
⦁ Post conflict countries (i.e. Somalia, Sudan, Iraq and Afghanistan are consistently ranked at the top of major corruption indicators)
⦁ Lack the capacity to govern and citizens support
⦁ Role of foreign aid
⦁ Changing government leadership
⦁ Many governed (or recently governed) by socialist governments
⦁ Low income
⦁ Low levels of human capital
⦁ Closed economies and markets heavily regulated
⦁ Have less freedom in their media. (Political pressure, repressive actions, economic influences over what gets printed)
Other measures of corruption
⦁ Control of Corruption Index (CC) by WB: Control of Corruption Index, which measures the degree to which corruption is perceived to exist among businesses, public officials and politicians.
⦁ It uses different data sources that the CPI and it includes 220 countries
⦁ Corruption Score by the International Country Risk Guide (ICRG): comprises 22 variables in three subcategories of risk: political (i.e. Government Stability), financial, and economic. A separate index is created for each of the subcategories
⦁ 140 countries
⦁ Incidence of Bribes from the International Crime Victim Surveys (ICVS)
⦁ High correlation among these indices

Magnitude of corruption
⦁ The rankings of countries as more or less corrupted are based on subjective judgments => cannot be used to quantify the magnitude of corruption Recently a small but growing body of micro research on identifying and quantifying corrupt behaviour
⦁ Among firms: survey data from Ugandan firms: (Svensson, 2003) => Over
80 percent of Ugandan firms reported needing to pay bribes
Among services delivery: public education program that offered a perstudent grant to cover nonwage expenditures in primary schools (Reinikka and Svensson (2004).
⦁ To estimate the magnitude of corruption, they compared flows disbursed from the central government to the schools, with survey data from 250 schools on the actual receipts of cash and in-kind school material
⦁ Over the period 1991-1995, schools received only 13 percent of central government spending on the program
⦁ Most schools received nothing and the evidence suggests that the bulk of grant was captured by local officials and politicians
2. What are the causes and consequences of corruption?
Why do people become corrupt?
Psycho-social theories
⦁ “Sucker mentality” (Finschenauer and Waring). If a person is in a corrupt system would be foolish not to take advantage of it. Example member of a minority ethnic group that was discriminated by the majority group were to reach a position of authority and not take personal advantage of this, she would be seen as a looser or a sucker.
⦁ Opportunity theory. People take advantage of opportunities that arise, being the right place at the right time. If there is a very slim chance to be caught and prosecuted, people in high environment corruption will take full advantage of this. Gary Becker.
⦁ Peer pressure, among superiors at work or partner. For instance, offers who join corrupt unite are often pressured in various ways into practicing into the unit’s corrupt activities, if they refuse they can be ostracized and threatened.
⦁ Fear can explain why some officers do not report organized crime of which they are aware. Drug cartels offer bribes, if refused, can lead to the killing of judges, lawyers, policemen. So root of problem a weak judiciary system that allows these criminals to threatened without punishing.
⦁ They say I’m corrupt don’t trust me. A criminology theory by Howerd Becker is that once a state or a society labels someone as a criminal or corrupt, they are likely to remain like that unless steps are taken. For instance, media can claim that custom offers are corrupt, even among those who are not might think if everyone thinks I’m corrupt, don’t’ trust me, then I will become one.
Why do people become corrupt?
Cultural explanations
⦁ Origin of legal code, those with Civil code more vulnerable than Common law, La Porta et al. However, Susan Rose-Ackerman argues that either system can promote corruption, as it also depends on other institutional arrangement such as attitudes for the judges, and the culture towards corrupt behaviour.
⦁ Some religious are more likely to be associated with corruption.
⦁ Protestant countries less corrupt as was born out of reaction to the corruption in the Catholic church.
⦁ Catholics can offload their sin via the confessional whereas protestants have to accept personal responsibility for their sins.
⦁ Catholic church are less corrupt than orthodox and Christian countries as a whole are less corrupt than most Muslim ones.
⦁ Ronald Inglehart is that more hierarchical systems tend to be more corrupt and Catholicism is more hierarchical than Protestant.
But these correlations, and patterns might be misleading. GDP per capita, level of democracy and trust and overall quality of governance are also strongly correlated to corruption as the religious or cultural variables.
What are the causes of corruption?
Economic theories
⦁ Discretionary power that creates rents. Vito Tanzi of the IMF the greater state involvement more interaction between state officials and business people and more opportunities for officials to rent-seek.
However, John Gerring and Strom Thacker find no clear correlation between the size of the state apparatus or how much the state interferes in the economy of business licences and corruption level. For instance, Tajikistan and Cambodia are highly corrupt countries, but less bureaucratic than Denmark, Norway and Canada. Sweden has an enormous state apparatus, yet has low levels of corruption.
⦁ Weak institutions that don’t deter or punish corruption.
-Shaped by history (inherit from the past, e.g. Colonizer)
-And develop in response to a country’s income level and needs. Human capital theory: growth in human capital and income cause institutional development (i.e. education and human capital is needed for courts and
other formal institutions to operate efficiently)

Fisman and Miguel. 2007. Corruption, Norms, and Legal Enforcement: Evidence from Diplomatic Parking Tickets. Journal of Political Economy.
Fisman and Miguel 2007
⦁ Contribution. First study that analyses whether cultural norms and legal enforcement are important determinants of corruption.
⦁ How: Empirical study using information on parking violations by United Nations officials in Manhattan. Exploiting a natural experiment.
⦁ Until 2002, diplomatic immunity protected UN diplomats from parking enforcement actions, so diplomats’ actions were constrained by cultural norms alone
⦁ Change in 2002 => Enforcement authorities acquired the permission to revoke diplomatic plates after 3 or more outstanding violations

Explaining parking violations by diplomats

Fisman and Miguel 2007
⦁ Exploit a natural experiment
⦁ Under zero legal enforcement: Revealed preference measure of corruption
⦁ Look into behavioural change with enforcement
⦁ Results: Strong effect of corruption norms: diplomats from high-corruption countries (on the basis of existing survey-based indices) accumulated significantly more unpaid parking violations.
⦁ Unpaid violations dropped sharply in response Violations fell by 98%
⦁ Cultural norms and (particularly in this context) legal enforcement are both important determinants of corruption.
⦁ Further checks. Those living in NY longer tend to become more corrupt, sharpest increase among those coming from low levels of corruption. Perhaps they learned that have immunity?
Also those closer to USA less likely to receive parking fines. Perhaps because are aware of rule of law in USA, more reciprocity?
What are the consequences of corruption?
Can endanger lives
Construction, bribes o ignore safety practices. Resulting collapsing buildings: Egypt, Turkey, China
Logging of trees along riverbanks, causing floods
Worsens security
Porous borders because of corruption increase illegal migration. Bulgaria and Romania were blocked in their attempts to join the Schengen zone.
FBI in 2014 charged a Californian state senator colluded with Chinese firm trafficking weapons to Islamic rebels in Philippines and Africa.
Harms the environment
Environment depleted. Largest producers of timber, Brazil, Indonesia and Russia, have experienced substantial environmental damage because of illegal logging facilitated by corrupt officials.
Harms the economy
-Lowers Foreign Direct Investment. Reduces competition, less likely to be open to trade. Leading to fewer firms, more black economy, higher prices (Shang-Jin Wei 2000).
-Can reduce Foreign Aid. Bulgaria, Romania and Czechia had major funding cuts from EU because of their corruption levels.
-Reduces tax revenue. First EU anti-corruption report (2014): Corruption costs EU estates collectively 120 billion Euros a year. African Union (2002) estimates $150 USA billion lost each year to corruption among its 53 member estates. That is a quarter of total GDP in Su-Saharan region.
Increases poverty and inequality
IMF (1998) 30 countries, 18-year period found corruption increase both. Bribery to get jobs, promotions and businesses.

Undermines electoral competition
Promotes vote-buying, lack of effective competition among parties.
Manzetti and Wilson (2007) citizens support corrupt politician if the state is weak and politician can get what the citizens want.
Holmes (2015) 14% in Germany, 35% in France, and 25% in Bulgaria, Italy, Poland and
Russia, would be more likely to vote in a two person electoral race for a dynamic but corrupt candidate with a reputation for getting things done than for a squeaky clean but ineffectual one.
Increases distrust of the state
Lowers trust in state, enhances identification of kith and kin leading to ethnic conflict. Less report crime, leading to more crime.
Undermines international sports
FIFA in early 2014 most widely reported example related to the bidding process for the
2022 world cup. These allegations, whether proven or not, undermine the international legitimacy of such bodies, as well as the states accused of involvement in corrupt practices.
3. Any solutions that actually work?

Solutions: Sticks
⦁ Reform legal system, including prosecutions, conviction rates and severity of the penalties. Botswana the least corrupt country in Africa and the have a prosecution rate well above the international level
⦁ If penalties too lenient the system will be ineffective as deterrent. Some countries have harsh sentences for corruption. For instance in 2011 a Judge in Pennsylvania was sentenced to 28 years in prison in kids for cash scandal.
⦁ Death penalty for corruption in 10 countries, China the only one to use it regularly, has executed former deputy majors of Hangzhou, Shenyang and Suzhou. Death penalty was rarely used in Vietnam until 2013, but three bankers were sentenced to death in 2013 and 2014 for embezzling state-run banks.
⦁ Require officials to declare their income and assets. In depth auditing of their incomes and expenditure, including access to the bank account, still many elite officials will use offshore accounts which authorities have no access.
⦁ While China under Xi Jinping has been making serious efforts to reduce corruption, four Chinese anti-corruption were sentences to 2-3 years in prison in April 2014 for publically advocating that state officials to be required to declare their assets.
Anti-corruption agencies
⦁ Have dedicated anti-corruption agencies. But both Singapore and Hong Kong attribute their success in combating corruption thanks to the establishment of the world’s first independent ACA (1952), and the Corrupt Practices Investigation Bureau. In many other countries ACAS perform poorly for various reasons, including inadequate funding and blurred lines of responsibility.
⦁ Jon S.T. Quah, leading expert on Asian corruption claims key of success in these cases: ACAs have sole responsibility for tackling corruption (as in Botswana) in most countries other countries have multiple agencies. Have their own investigative powers and answer directly to the prime minister. Sevensson instead argues, ACAS worked in Singapore because in parallel:
-Civil servants pay relative to private sector increased considerably
-Public officials routinely rotated
-Rewards given to those who refused bribes
-Rules and procedures were simplified and published
-Permits and approvals scrapped
-Fees including import duties were lowered or reduced.
Name and shame
⦁ Use public shaming. In February 2013 South African Justice Minister announced that will be publishing the names of those convicted of corruption for the media to use this. So far published 42 people convicted of serious case of fraud and corruption.
⦁ Publicly blacklisting private companies found to have engaged in the corruption of public officials. Singapore debarred five major corporations including Siemens (Germany), BICC (UK), and Pirelli (Italy), from tendering for Singaporean contracts for five years after they bribed an official.
⦁ Siemens has been debarred in several countries (Italy, Slovakia, and Brazil) and accused of corruption in Argentina.
Solutions: Carrots
⦁ Increase salaries. The success of anti-corruption policies for Singapore, Georgia and to a lesser extent Russia has been linked to substantial pay-raises. However, this is not without problems, most corrupt countries are among poorest cannot afford to increase salaries. Further examples that officials after higher salaries continue enjoying taking bribes, so are in a win-win situation, whereas state is a lose-lose paying more and not increasing state revenue.
⦁ Provide financial rewards to officials playing a positive role in combating corruption. Can backfire, in Hungary decided to pay bonuses to customs officers who reported travellers offering bribes to smuggling goods. One officer was successful that earned more than prime minister as made false accusations.
⦁ Whistleblowers from within organization find themselves coldshoulders by colleagues and eventually dismissed for forced to leave.
⦁ Witness under protection to report violent crimes are costly, and not protect lives if the true identities not protected.
Administrative and technical measures
⦁ Rotation, where officials move on a regular basis form one to another office. Rationale is that corrupt networks take time to develop. This was conducted in Germany where reduced corruption, whereas in India was less encouraging as managers tell each other who is corruptible and who is not. Also citizens might pay twice for a service as the original corrupt official was moved and had to pay to replacement.
When corruption has been so intense option is to fire everyone and replace new staff. Mikheil Saakashvili when he was president of Georgia he dismissed all the officers from traffic police from 2004 on, shut it down and replaced it with a new image, scoring major success.
Another way is having CCTV in strategic locations such as at border crossing where there is suspected high level of corruption. And wider use of automated speed cameras to reduce opportunities for traffic police to adapt to demand bribes from motorist.

⦁ Change gender balance. Peru in the 1990s criticized by high levels of corruption. WB suggested experimenting with a change in gender balance, since women were considered to be less easily corrupted than men. A decade later, Peruvian police claimed a major success. Marilyn Corsiansos research into corruption among US police officers suggests that there is less corruption when there is a high percentage of female officers
⦁ Sabrina Karim, suggests that while feminizing the force decline in corruption the results were less impressive than officially presented. Corruption networks take time to develop so women can become corrupt once develop these networks.
⦁ If you cannot beat them join them. During the 1990s there was a problem of corruption in the Romanian military enrolling conscripts where militaries sign unfit for military service in return for bribes. Instead of trying to deal with this corruption, the government adopted a lateral approach and made it legal for those who did not want to engage in military service to buy themselves out. This increased state fees, instead of officers pockets.

⦁ In mid-1990s Mayor of Colombian Capital Bogota, Antanas Mockus, instead of those breaking the traffic rules were mocked by a large tem of mime artists.
⦁ This improved traffic situation and reduced corruption.
Media
⦁ In a well-functioning democratic system, the mass media both print and electronic have a significant role in combating corruption. They can investigate and publish their findings. So its important to increase competition among media houses and reduce state control.
⦁ Russia in 2013 introduced a law that prohibits the media from publishing details for the private assets of members of the families of senior officials, as political elite have improperly registered property in the names of family members, including children to hide wealth.
⦁ Mexico 2015, a team of national proclaimed journalist was dismissed for opening a website where they were leak corruption information and a report that upset the president regarding his 7 million USD house.
Media as watchdog
⦁ Greedy people who suddenly get confronted with the public can help. Heather Brook, journalist requested UK MPs expenditure to be released publically. Took her five years for MPs to finally released the data.
⦁ February 2008 Freedom of Information Act request for the release of details of MPs’ expenses claims was allowed by an Information Tribunal but challenged by The House of Commons Authorities on the grounds that it was “unlawfully intrusive”. Eventually law was passed.
⦁ Daily Telegraph released data: MPs used public money to pay:
Porn movies, new kitchens, renting several houses in London, paying mortgages that never existed
As result
⦁ Six ministers resigned
⦁ The first speaker of house in 300 years forced to resign
⦁ 4 MPs and 2 Lords have done time jail for fraud
⦁ Several MPs withdrew their intention to be contend in next election given calls for more transparency
Ferraz and Finan (2008)
Exposing corrupt politicians
⦁ Brazil is one of the most decentralized countries in the world
⦁ Local governments provide health, primary school education, infrastructure, sanitation
⦁ Mostly paid for from federal block grants
⦁ Concerned with extent of local corruption, in May 2003 the Federal government began to audit federal funds transferred to municipalities
⦁ Each month the Controladoria Geral da Uniao (CGU), joint with the national lottery, draws 60 municipalities randomly across 5000 municipalities

Design
⦁ Municipalities are randomly selected: Address identification issues. Some released before and others after 2004 elections.
⦁ Audit reports are publicly available: Measure corruption and the information voters received. 10-20 auditors are immediately sent to examine the allocation of the federal funds
⦁ Media was used to disseminated audit findings:
program to have a differential effect in municipalities with local media
Ferraz and Finan 2008
Results
⦁ Publicly released audits reduced re-election of corrupt incumbent mayors. In municipalities where two corruption violations were reported, the audit policy and the information release reduced the incumbent’s likelihood of re-election by 7 percentage points
⦁ The effect of disclosing information on corrupt politicians was more severe in those municipalities with a local radio station. In municipalities where two violations were reported and a radio station existed, the audit policy and release of information reduced the incumbent’s likelihood of Re-election by 11 percentage points
⦁ Findings highlight the value of having a more informed electorate and the role played by local media in enhancing political selection.
Challenges
⦁ Monitoring how corrupt politicians/firms transfer funds globally.
⦁ World Bank looked at 200 cases of corruption, 70% used anonymous shell companies totalling in 56 billion dollars. These companies were in USA, UK.
⦁ These anonymous companies are central to corruption, to the benefit of “secret” elites, tax evasion and money laundering.
⦁ Billions of dollars leaking through corruption get transfer to tax heavens. In a globalized world, we need globalized solutions.
⦁ Brave journalist or officials leaking information to public:
Interviews, secret filming, photography, document research.
Global Witness
⦁ Other journalist globally collecting data on one site how these are moving assets from one country
⦁ For two decades campaigning for full transparency in the mining, logging, oil and gas sectors, so that citizens who own those resources can benefit fairly from them, now and in future.
⦁ Two thirds of the value of worlds’ mining and oil are now covered by transparency laws.
⦁ Similarly, one of the most serious areas of potential corruption is procurement.
⦁ Defence contracts are worth billions, and numerous examples of manufactures of aircraft paying substantial bribes.
⦁ One way to counter is to have open-line tendering, thus rendering the whole procurement process far mare transparent.

Overseas law
⦁ Until the 1990s the USA was the only country to have legislation that applied to misconduct by its corporate sector overseas.
⦁ This followed a scandal in 1977 where a leading US manufacturer of military aircraft was found to have been paying bribes over many years in several countries to secure overseas contracts.
⦁ WalMart in April 2012 was publically accused in New York Times of bribery in Mexico, and in February 2014 was fined US$200 million USD in USA.
⦁ But OECD anti-bribery convention 30/40 countries that signed up are barely investigating and prosecuting foreign bribery
International cooperation
⦁ States can help each other to reduce corruption by permitting extraditions, forbidding their banks accepting questionable overseas deposits.
⦁ This will help to reduce terrorism as well.
⦁ Despite the increasing pressure, many countries permit banking practices that allow money laundry, including Iran, North Korea.
Financial Secrecy Index 2013
Worst offenders (Tax Justice Network)
Facilitates tax evasion
Money laundry
Terrorism
Corruption
Cayman Island and Nuru have been recently removed from this black list
International community
⦁ Most controversial approaches adopted by both IMF and World Bank is to suspend or cancel loans because of corruption. Both suspended loans to Kenya in 1997 because of corruption.
⦁ More recently WB cancelled a 1.2 billion USD loan to
Bangladesh in 2012 because of suspected corruption of Bangladeshi officials and a Canadian engineering firm that would build the country’s longest bridge.
A small number of companies in recent years have threatened to withdraw or have actually withdrawn from countries because corruption situations. IKEA in Russia, Unilever withdrew for three years from Bulgaria for corruption in 1997.
Civil society
⦁ Corruption is not always driven by greedy officials. Citizens are sometimes the first ones to offer bribes, evidence of this in Bosnia-Herzegovina, where 50% of bribes where initiated by the citizen (EU 2014).
⦁ A long term solution is to try change public attitudes and with ethical education. It is not right to bribe your teacher, policemen, and official, MP to jump the queue, get preferential treatment or try getting a job in civil service.
⦁ Limited empirical evidence suggests that dedicated seminars for officials, executives, children can have an affect in corruption in the short run.
⦁ Remember failed intervention in India on corruption.
Civil society
⦁ There are 350 anti-corruption NGOs over 100 countries linked each other through the UNCAC coalition established in 2006 to coordinate and share the work and share best practice experiences of various NGOS.
⦁ Another global network is Publish What you Pay, with more than 800 civil society organizations worldwide, focused on corruption and malpractices in the extractive industry sector (oil gas, minerals).

⦁ Facebook has a Name and shame your corrupt politicians and Public Servants facility.
⦁ In 2012, Frank Vogl emphasized the role of tweeting, as a major factor in raising political awareness among countries that experiences the so called Arab Spring, and weapon to fight against corruption.
⦁ While this often technology, it is not always the case. See this in Kenya anti-corruption box, lowtech.
So what works?
⦁ Having considered quite a few methods, what works, what is most effective?
⦁ Unfortunately, every method has its drawbacks.
⦁ Do a vulnerability risk as where is more sensible to implement these types of measures.
⦁ Olken tested in Indonesia top-down and bottom up with audits vs community monitoring, finding only one of them was effective in tackling corruption.
Olken B. 2007. Monitoring Corruption:
Evidence from a Field Experiment in
Indonesia. Journal of Political Economy
Mechanisms for fighting local corruption
⦁ Top-down monitoring – i.e. auditors
⦁ Traditional economic approach to crime
⦁ Key difference: auditors may themselves be corrupt
⦁ Bottom-up monitoring – i.e. community members
⦁ Local participants may have better information
⦁ Citizens benefit from good project, so different incentives
⦁ But decentralized monitoring is a public good, so people may free ride
⦁ Grass root monitoring favoured by development community
2004 World Development report: “Putting poor people at the center of service provision, enabling them to monitor and discipline service providers, amplifying their voice in policymaking and strengthening the incentives for service provides to serve the poor”
Monitoring Corruption: Evidence from a Field Experiment in Indonesia
⦁ Aim: test if grassroots participation by community members in local-level monitoring might decrease corruption
⦁ Method: Randomized Control Trial in 608 Indonesian villages which were about to start a road construction project. Three types of treatment.
⦁ Intervention:
1 External monitoring: To some villages were told, after funds had been awarded but before construction began, that their project would subsequently be audited by the central government audit agency
The results of the audits will be read publicly to an open village
meeting by the auditors and so could result in substantial social sanctions
Monitoring Corruption: Evidence from a Field Experiment in Indonesia
2. Community participation
Distributed invitations to accountability meetings to encourage direct participation in the monitoring process and to reduce elite dominance
3. Community participation with feedback forms
A sub-set of community participation were given an anonymous comment form along with the invitations, providing villagers an opportunity to relay information about the project without fear of retaliation. This comment form was then collected in sealed drop boxes before the accountability meetings, and the results were summarized at the meetings
Monitoring Corruption: Evidence from a Field Experiment in Indonesia
⦁ How to measure corruption? A team of engineers and surveyors who, after the projects were completed, dug core samples in each road to estimate:
⦁ the quantity of materials used,
⦁ surveyed local suppliers to estimate prices,
⦁ interviewed villagers to determine the wages paid
⦁ Construct an estimate of the amount each project actually cost to build and then compare this estimate with what the village reported it spent on the project on a line-item by line-item basis
⦁ Calculation of missing expenditure: difference between the village claimed the road cost and what the engineers estimated it actually cost
Monitoring Corruption: Evidence from a Field
Experiment in Indonesia
⦁ Empirical Strategy
PercentMissing = α+β Audit +γ Invitations +δ Invitations&Comments +є

Results
Although increased participation, no impact of invitations on overall missing expenditure. Although reduction in wages, compensation by increasing materials. Wages easier for community to check. Same result among invitations+comments

Conclusions
•The first pre-requisite for effectively addressing corruption is to recognise it as a serious impediment to growth.
•Corruption contributes to state fragility and undermining democracy => likely to affect the state capacity to prevent and manage conflicts.
•The ultimate success depends on the political will and have the capacity to implement their will. Numerous parties involved, state officials, corporate sector, international community, civil society.
•We will always have corruption, but it will get reduced in more robust democracies, with strong commitment to the rule of law and in well develop civil societies with higher human capital.
What did we achieve in the course?
⦁ We embarked on a comprehensive journey on how to achieve development and investigated:
⦁ What hinders development: Geography vs. Bad institutions
⦁ Why we have so much conflict and its effects
⦁ The importance of well functioning democracies for growth and how to address electoral violence
⦁ Initiatives to vote for better performing/less corrupt people
⦁ The good vs. ineffective foreign aid
⦁ How to foster development: Randomized control trials on human capital (major challenges in health & education, conditional cash transfers), micro-finance with all its failures in micro-credits and promising policies in microinsurance and micro-savings
⦁ In the process we learned about modern quants methods and stata: OLS, Randomized trials, Instrumental Variables, Diff-in-diff, Regression discontinuity, natural experiments.
Thank you!
⦁ Thank you for choosing this module
⦁ For engaging and participating
⦁ I hope that the course has offered you a flavour of the most pressing issues in development
⦁ And perhaps encourages you to work on these issues directly, or indirectly, as a informed citizen
Hope these helps you

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