Publication: The Silence of Corruption : Identifying Underreporting of Business Corruption through Randomized Response Techniques
Loading...
Date
2011-06-01
ISSN
Published
2011-06-01
Author(s)
Editor(s)
Abstract
Research on the economic consequences of corruption has been hampered by the inability to directly measure corruption. Using an innovative methodology that allows respondents to report individual experiences with corruption while minimizing self-incrimination and an objective diagnostic to evaluate lying (false responses), this paper explores the extent of business corruption in Bangladesh. The analysis shows that traditional measures of corruption underreport the extent of business corruption in Bangladesh and existing strategies to evaluate and elicit truthful responses have limited effectiveness. The authors identify the types of firms that are associated with false responses and nonresponses to survey questions on corruption.
Link to Data Set
Citation
“Jensen, Nathan M.; Rahman, Aminur. 2011. The Silence of Corruption : Identifying Underreporting of Business Corruption through Randomized Response Techniques. Policy Research working paper ; no. WPS 5696. © World Bank. http://hdl.handle.net/10986/3459 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Publication Geopolitics and the World Trading System(Washington, DC: World Bank, 2024-12-23)Until the beginning of this century, the GATT/WTO system worked. Economic research provided a compelling explanation. It showed that if governments maximize the well-being of their own countries broadly defined, GATT/WTO principles would facilitate mutually beneficial cooperation over their trade policy choices. Now heightened geopolitical rivalry seems to have undermined the WTO. A simple transposition of the previous rationalization suggests that geopolitics and trade cooperation are not compatible. The paper shows that this is only true if rivalry eclipses any consideration of own-country well-being. In all other circumstances, there are gains from trade cooperation even with geopolitics. Furthermore, the WTO’s relevance is in question only if it adheres too rigidly to its existing rules and norms. Through measured adaptation to the geopolitical imperative, the WTO can continue to thrive as a forum for multilateral trade cooperation in the age of geopolitics.Publication The Macroeconomic Implications of Climate Change Impacts and Adaptation Options(Washington, DC: World Bank, 2025-05-29)Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.Publication Global Poverty Revisited Using 2021 PPPs and New Data on Consumption(Washington, DC: World Bank, 2025-06-05)Recent improvements in survey methodologies have increased measured consumption in many low- and lower-middle-income countries that now collect a more comprehensive measure of household consumption. Faced with such methodological changes, countries have frequently revised upward their national poverty lines to make them appropriate for the new measures of consumption. This in turn affects the World Bank’s global poverty lines when they are periodically revised. The international poverty line, which is based on the typical poverty line in low-income countries, increases by around 40 percent to $3.00 when the more recent national poverty lines as well as the 2021 purchasing power parities are incorporated. The net impact of the changes in international prices, the poverty line, and new survey data (including new data for India) is an increase in global extreme poverty by some 125 million people in 2022, and a significant shift of poverty away from South Asia and toward Sub-Saharan Africa. The changes at higher poverty lines, which are more relevant to middle-income countries, are mixed.Publication Geopolitical Fragmentation and Friendshoring(Washington, DC: World Bank, 2025-06-26)This paper examines the relationship between geopolitical fragmentation and friendshoring of foreign investments over time, countries, and sectors. The analysis uses comprehensive data on foreign direct investments covering greenfield projects, mergers and acquisitions, and stocks of affiliates, as well as data on four alternative measures of geopolitical distance between countries. The gravity estimations suggest that, first, geopolitical differences have a negative effect on foreign investments and the magnitude has heightened in the post-pandemic period compared to a decade ago. Second, it is primarily the companies from advanced Western economies whose foreign investment decisions are increasingly shaped by friendshoring forces. Finally, the paper shows that friendshoring is not only confined to strategic industries, implying that allocations of foreign direct investments may not solely reflect national security or resilience considerations.Publication A Global Assessment of Domestic Petroleum Fuel Prices(Washington, DC: World Bank, 2025-06-26)Oil prices have been increasingly volatile since 2004. However, the impact of this volatility on domestic end-user prices differs significantly by fuel and country. Some countries fully pass through global price movements to domestic end-user prices, and some countries freeze domestic fuel prices for long periods of time. Fuel subsidies emerge or grow if domestic prices significantly diverge from international prices in times of rising international oil prices. This paper draws on two new databases developed by the author for the purposes of this paper to analyze the degree of pass-through of international price volatility onto domestic consumers for eight fuels between December 2017 and December 2023 for up to 125 economies, depending on the fuel. This period saw significant oil price volatility on account of events such as the COVID-19 pandemic and the war in Ukraine. The paper finds that domestic prices in many countries did not follow international fuel prices within the period analyzed. Countries with price controls had much lower levels of pass-through than those with price deregulation. Countries that adjusted their fuel prices at frequent intervals (weekly or monthly) had higher levels of price pass-through than those adjusting them quarterly or less frequently. Currency depreciation and the existence of an official fuel subsidy are associated with lower levels of price pass-through, and the impact of being a net crude oil or net refined fuel exporter is mixed. The results show that not tracking international prices closely is associated with higher incidences of fuel shortages, fuel smuggling, and fuel black marketing.
Journal
Journal Volume
Journal Issue
Citations
Collections
Related items
Showing items related by metadata.
Publication Removing Impediments to Sustainable Economic Development : The Case of Corruption(World Bank, Washington, DC, 2013-11)This paper examines causes and consequences of corruption within the process of economic development. It starts by reviewing some of the factors that, over the past couple of decades, have transformed corruption from a subject on the sidelines of economic research to a central preoccupation of policy makers and donors in many countries. Drawing on a vast treasure trove of experiences and insights accumulated during the postwar period and reflected in a growing body of academic research, the paper analyzes many of the institutional mechanisms that sustain corruption and the impact of corruption on development. This paper argues that many forms of corruption stem from the distributional attributes of the state in its role as the economy's central agent of resource allocation. What is the impact of corruption on public finances and on the characteristics and performance of the private sector? What distortions does corruption introduce in the allocation of resources and in the relationships among economic agents in the marketplace? The paper also addresses the question of what can be done about corruption and discusses the role of economic policies in developing the right sorts of incentives and institutions to reduce the incidence of corruption. Particular attention is paid to business regulation, subsidies, the budget process, international conventions, and the role of new technologies. The paper concludes with some thoughts on the moral dimensions of corruption.Publication Drivers of Corruption : A Brief Review(Washington, DC: World Bank, 2014-10-15)Corruption is motivated by the possibility of securing something of value for oneself and one s allies. The desire to secure benefits is a human trait and generally positive for development; various forms of rewards drive humans to get up in the morning, do a good job, and act responsibly. The discussion now turns to the opportunity to secure more benefits than are entitled to within the existing rules of the game ; specifically, the opportunity to grab at the expense of society. A decision maker has the authority to influence an outcome that matters to the briber. For steering a decision in the briber s direction, the decision maker is compensated with a bribe. The steered decision and the bribe now become assets that usually exceed what at least one of the players would have obtained without the corrupt act. The opportunity to seize assets through some form of power misuse differs across sectors, organizations, and decision-making situations. This chapter describes the circumstances in which the risk of corruption is particularly high in other words, where the drivers of corruption can be found.Publication “Heard Melodies Are Sweet, but Those Unheard Are Sweeter” : Understanding Corruption Using Cross-National Firm-Level Surveys(World Bank, Washington, DC, 2007-11)Since the early 1990s, a large number of studies have been undertaken to understand the causes and consequences of corruption. Many of these studies have employed firm-level survey data from various countries. While insightful, these analyses based on firm-level surveys have largely ignored two important potential problems: nonresponse and false response by the firms. Treating firms' responses on a sensitive issue like corruption at their face value could produce incorrect inferences and erroneous policy recommendations. We argue that the data generation of nonresponse and false response is a function of the political environment in which the firms operate. In a politically repressive environment, firms use nonresponse and false response as self-protection mechanisms. Corruption is understated as a result. We test our arguments using the World Bank enterprise survey data of more than 44,000 firms in 72 countries for the period 2000-2005 and find that firms in countries with less press freedom are more likely to provide nonresponse or false response on the issue of corruption. Therefore, ignoring this systematic bias in firms' responses could result in underestimation of the severity of corruption in politically repressive countries. More important, this bias is a rich and underutilized source of information on the political constraints faced by the firms. Nonresponse and false response, like unheard melodies, could be more informative than the heard melodies in the available truthful responses in firm surveys.Publication The Moral Compass of Companies(International Finance Corporation, Washington, DC, 2009-02-15)This publication targets private sector stakeholders who want to reduce a company s risk and vulnerability to corruption. It aims to provide guidance and recommendations for integrating ethics programs into corporate governance mechanisms to safeguard against corruption. Anti-corruption attitudes have changed significantly over the past two decades. Corruption is no longer regarded as a subject to be avoided and is now widely condemned for its damaging effect on countries, industries, governments, and the livelihoods of individual citizens. More importantly, the view of the private sector in the corruption equation is changing. Companies are no longer viewed only as facilitators of corruption - they are increasingly recognized as victims and a valuable source of working solutions, and anti-corruption efforts seen as integral to good corporate governance, Predictable, competitive, and fair economic environments free of corruption are central to sustainable business, economic growth and national development. It has been an easier task to raise this awareness than to reduce the corrosive effects of corruption, especially its worst manifestation of state capture. And though the challenge defies simple solutions, significant progress is being made. Today we have in place numerous international conventions and global collective action initiatives that set higher standards of transparency and accountability in corporate and public governance. More importantly, such standards are buttressed by a growing convergence of ethical values that set the tone for 'doing the right thing' in both the public and private sectors.Publication Changing Norms is Key to Fighting Everyday Corruption(World Bank, Washington, DC, 2011-10)One of the biggest impediments to anticorruption efforts is the fact that corrupt practices have become so institutionalized in everyday society that citizens view them as fixed and incontestable. To break down such an entrenched mind-set, the public s ignorance of their rights, cynicism, fear of reprisal, and mentality of submission to the status quo must first be defeated. Perhaps most important, the efficacy challenge needs to be addressed. Citizens generally must believe that they can actually do something about corruption in order to summon the courage to act upon that belief. Based on CommGAP s interactions with the global anticorruption community as well as earlier research, we were able to collate 18 representative instances (case studies) from around the world, with real-life examples of citizens coming together to speak up against corruption and social norms vis-à-vis corruption or to change public services affected by corrupt practices. This report is a one-step-up analysis of the collated case studies, which is intended to shed light on practical approaches, tools, and techniques that have been successful in bringing citizens together to stand against the daunting phenomenon of corruption.
Users also downloaded
Showing related downloaded files
Publication Design Thinking for Social Innovation(2010-07)Designers have traditionally focused on enchancing the look and functionality of products.Publication Measuring Financial Inclusion : The Global Findex Database(World Bank, Washington, DC, 2012-04)This paper provides the first analysis of the Global Financial Inclusion (Global Findex) Database, a new set of indicators that measure how adults in 148 economies save, borrow, make payments, and manage risk. The data show that 50 percent of adults worldwide have an account at a formal financial institution, though account penetration varies widely across regions, income groups and individual characteristics. In addition, 22 percent of adults report having saved at a formal financial institution in the past 12 months, and 9 percent report having taken out a new loan from a bank, credit union or microfinance institution in the past year. Although half of adults around the world remain unbanked, at least 35 percent of them report barriers to account use that might be addressed by public policy. Among the most commonly reported barriers are high cost, physical distance, and lack of proper documentation, though there are significant differences across regions and individual characteristics.Publication Governance Matters IV : Governance Indicators for 1996-2004(World Bank, Washington, DC, 2005-06)The authors present the latest update of their aggregate governance indicators, together with new analysis of several issues related to the use of these measures. The governance indicators measure the following six dimensions of governance: (1) voice and accountability; (2) political instability and violence; (3) government effectiveness; (4) regulatory quality; (5) rule of law, and (6) control of corruption. They cover 209 countries and territories for 1996, 1998, 2000, 2002, and 2004. They are based on several hundred individual variables measuring perceptions of governance, drawn from 37 separate data sources constructed by 31 organizations. The authors present estimates of the six dimensions of governance for each period, as well as margins of error capturing the range of likely values for each country. These margins of error are not unique to perceptions-based measures of governance, but are an important feature of all efforts to measure governance, including objective indicators. In fact, the authors give examples of how individual objective measures provide an incomplete picture of even the quite particular dimensions of governance that they are intended to measure. The authors also analyze in detail changes over time in their estimates of governance; provide a framework for assessing the statistical significance of changes in governance; and suggest a simple rule of thumb for identifying statistically significant changes in country governance over time. The ability to identify significant changes in governance over time is much higher for aggregate indicators than for any individual indicator. While the authors find that the quality of governance in a number of countries has changed significantly (in both directions), they also provide evidence suggesting that there are no trends, for better or worse, in global averages of governance. Finally, they interpret the strong observed correlation between income and governance, and argue against recent efforts to apply a discount to governance performance in low-income countries.Publication Government Matters III : Governance Indicators for 1996-2002(World Bank, Washington, DC, 2003-08)The authors present estimates of six dimensions of governance covering 199 countries and territories for four time periods: 1996, 1998, 2000, and 2002. These indicators are based on several hundred individual variables measuring perceptions of governance, drawn from 25 separate data sources constructed by 18 different organizations. The authors assign these individual measures of governance to categories capturing key dimensions of governance and use an unobserved components model to construct six aggregate governance indicators in each of the four periods. They present the point estimates of the dimensions of governance as well as the margins of errors for each country for the four periods. The governance indicators reported here are an update and expansion of previous research work on indicators initiated in 1998 (Kaufmann, Kraay, and Zoido-Lobat 1999a,b and 2002). The authors also address various methodological issues, including the interpretation and use of the data given the estimated margins of errors.Publication Governance Matters VIII : Aggregate and Individual Governance Indicators 1996–2008(2009-06-01)This paper reports on the 2009 update of the Worldwide Governance Indicators (WGI) research project, covering 212 countries and territories and measuring six dimensions of governance between 1996 and 2008: Voice and Accountability, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption. These aggregate indicators are based on hundreds of specific and disaggregated individual variables measuring various dimensions of governance, taken from 35 data sources provided by 33 different organizations. The data reflect the views on governance of public sector, private sector and NGO experts, as well as thousands of citizen and firm survey respondents worldwide. The authors also explicitly report the margins of error accompanying each country estimate. These reflect the inherent difficulties in measuring governance using any kind of data. They find that even after taking margins of error into account, the WGI permit meaningful cross-country comparisons as well as monitoring progress over time. The aggregate indicators, together with the disaggregated underlying indicators, are available at www.govindicators.org.