Publication: Transport Construction, Corruption and Developing Countries
Abstract
The construction industry is consistently ranked as one of the most corrupt industries worldwide. The impact of corruption goes beyond bribe payments to poor-quality construction of transport infrastructure with low-economic returns alongside low funding for maintenance. Regulation of the construction sector is necessary, but simplicity, transparency, enforcement and a focus on the outcomes of poor construction are likely to have the largest impact. Where government is the client, attempts to counter corruption need to begin at the level of planning and budgeting. Output-based and community-driven approaches show some promise as tools to reduce corruption, they will need to be complemented by a range of other interventions including publication of procurement documents, independent and community oversight, physical audit and public-private anti-corruption partnerships.
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Publication Construction, Corruption, and Developing Countries(World Bank, Washington, DC, 2007-06)The construction industry accounts for about one-third of gross capital formation. Governments have major roles as clients, regulators, and owners of construction companies. The industry is consistently ranked as one of the most corrupt: large payments to gain or alter contracts and circumvent regulations are common. The impact of corruption goes beyond bribe payments to poor quality construction of infrastructure with low economic returns alongside low funding for maintenance-and this is where the major impact of corruption is felt. Regulation of the sector is necessary, but simplicity, transparency, enforcement, and a focus on the outcomes of poor construction are likely to have a larger impact than voluminous but poorly enforced regulation of the construction process. Where government is the client, attempts to counter corruption need to begin at the level of planning and budgeting. Output-based and community-driven approaches show some promise as tools to reduce corruption. At the same time they will need to be complimented by a range of other interventions including publication of procurement documents, independent and community oversight, physical audit, and public-private anticorruption partnerships.Publication Measuring Corruption in Infrastructure: Evidence from Transition and Developing Countries(2009)This paper examines what we can say about the extent and impact of corruption in infrastructure using existing evidence. There is evidence that most perceptions measures appear to be very weak proxies for the actual extent of corruption in the infrastructure sector, largely (but inaccurately) measuring petty rather than grand corruption. Survey evidence is more reliable, but limited as a tool for differentiating countries in terms of access to infrastructure finance or appropriate policy models. The paper suggests that a focus on bribe payments as the indicator of the costs of corruption in infrastructure may be misplaced.Publication Publishing Construction Contracts and Outcome Details(2010-03-01)Construction governance failures can lead to the construction of the wrong infrastructure, poor quality construction, and excessively high prices for work. There is some evidence from both other sectors and the construction sector itself that improved transparency, especially when combined with oversight, can improve development outcomes through its impact on the quality of governance. This paper reviews that evidence, discusses costs and benefits of greater transparency in particular with regard to the contracting and delivery process in construction, and briefly discusses an initiative to improve governance in public construction -- the Construction Sector Transparency Initiative.Publication A Trio of Perspectives on Corruption : Bias, Speed Money and “Grand Theft Infrastructure”(2011-11-01)A number of recent survey articles express hope that new data from enterprise surveys would shed new light on corruption complementing the corruption perception index by Transparency International. The paper explores this using the World Bank's Enterprise Survey data globally and not just the data on Eastern Europe and Central Asia that have been used before. The authors find that in general the Enterprise Survey data provide aggregate views on corruption that are similar to the corruption perception index. However, massive differences exist for key countries, such as China and India. This suggests that idiosyncratic, country-specific biases are at work in one or both data sources. The authors use the Enterprise Survey data and relate them to measures of bureaucratic complexity from the World Bank's Doing Business data, finding that more red tape is associated with higher corruption. The data are also consistent with the view that bribe payments reduce the burden of red tape. Finally, the paper looks at corruption in infrastructure. It has been suggested that the natural monopoly characteristics of infrastructure provide the lever to extract bribes. However, based on data on price-cost gaps, the authors find that infrastructure ventures in power and water typically charge prices below cost in developing economies, not anywhere near monopoly prices. Furthermore, the Enterprise Surveys do not suggest that infrastructure-related bribe payments are more significant than those, for example, related to tax payments or various forms of licensing. Existing sources on bribery surrounding specific projects suggest that the value of bribe payments may not be the biggest problem but the choice of uneconomic and inefficient projects. If infrastructure ventures were entirely dependent on revenue from user fees, they could not afford to pursue inefficient projects, thus reducing the cost of corrupt activity to society. Monopoly pricing would be better than the typical current pricing policy.Publication Deterring Corruption and Improving Governance in the Urban Water & Sanitation Sector(World Bank, Washington, DC, 2009-01)Governments typically provide the water and sanitation sector with substantial amounts of public money. Monopoly power, public funds, and discretionary decisions, coupled with poor accountability, breed corruption. The best hope for reducing corruption in the water and sanitation sector is to incentivize water sector officials and managers to be responsive to citizens' demands.
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