Measuring Governance, Corruption, and State Capture : How Firms and Bureaucrats Shape the Business Environment in Transition Economies
As a symptom of fundamental institutional weaknesses, corruption needs to be viewed within a broader governance framework. It thrives where the state is unable to reign over its bureaucracy, to protect property and contractual rights, or to provide...
| Main Authors: | , , , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2000/04/437919/measuring-governance-corruption-state-capture-firms-bureaucrats-shape-business-environment-transition-economies http://hdl.handle.net/10986/18832 |
| Summary: | As a symptom of fundamental
institutional weaknesses, corruption needs to be viewed
within a broader governance framework. It thrives where the
state is unable to reign over its bureaucracy, to protect
property and contractual rights, or to provide institutions
that support the rule off law. Furthermore, governance
failures at the national level cannot be isolated from the
interface between the corporate and state sectors, in
particular from the heretofore under-emphasized influence
that firms may exert on the state. Under certain conditions,
corporate strategies may exacerbate mis-governance at the
national level. An in-depth empirical assessment of the
links between corporate behavior and national governance can
thus provide particular insights. The 1999 Business
Environment and Enterprise Performance Survey (BEEPS) - the
transition economies component of the ongoing World Business
Environment Survey - assesses in detail the various
dimensions of governance from the perspective of about 3,000
firms in 20 countries. After introducing the survey
framework and measurement approach, the authors present the
survey results, focusing on governance, corruption, and
state capture. By unbundling governance into its many
dimensions, BEEPS permits an in-depth empirical assessment.
The authors pay special attention to certain forms of grand
corruption, notably state capture by parts of the corporate
sector - that is, the propensity of firms to shape the
underlying rules of the game by "purchasing"
decrees, legislation, and influence at the central bank,
which is found to be prevalent in a number of transition
economies. The survey also measures other dimensions of
grand corruption, including those associated with public
procurement, and quantifies the more traditional
("prettier") forms of corruption. Cross-country
surveys may suffer from bias if firms tend to systematically
over- or underestimate the extent of problems within their
country. The authors provide a new test of this potential
bias, finding little evidence of country perception bias in BEEPS. |
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