"Seize the State, Seize the Day" : State Capture, Corruption, and Influence in Transition
The main challenge of the transition has been to redefine how the state interacts with firms, but little attention has been paid to the flip side of the relationship : how firms influence the state - especially how they exert influence on, and coll...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2000/09/693317/seize-state-seize-day-state-capture-corruption-influence-transition http://hdl.handle.net/10986/19784 |
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okr-10986-19784 |
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oai_dc |
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Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ADMINISTRATIVE CORRUPTION ADMINISTRATIVE REGULATIONS ASYMMETRIC INFORMATION BRANCHES BRIBERY BRIBES BUREAUCRACY BUSINESS ENVIRONMENT CENTRAL BANK COLLECTIVE ACTION COLLUSION COMMUNIST CONSTITUENCY CORRUPT OFFICIALS CORRUPTION COUNTRY AVERAGES DECREE DECREES DEMOCRATIC ELECTIONS ECONOMIC COMPETITION ECONOMIC GROWTH EXTORTION FINANCIAL SYSTEM FIRM SIZE FIRMS FOREIGN INVESTORS FOREIGN OWNERSHIP GOVERNANCE DATA GOVERNANCE DIMENSIONS GOVERNANCE VARIABLES GROWTH RATES INSTITUTIONAL REFORMS INTERNATIONAL DEVELOPMENT LAWS LEGAL FRAMEWORK LEGAL SYSTEMS LEGISLATION LEGISLATURE MEASURING CORRUPTION MEDIA MONETARY POLICY NATIONAL LEVEL NEGATIVE EXTERNALITIES OFFICIALS PARLIAMENTARY VOTES PETTY CORRUPTION POLITICAL ACCOUNTABILITY POLITICAL COMPETITION POLITICAL CONTESTABILITY POLITICAL DYNAMICS POLITICAL ECONOMY POLITICAL INSTITUTIONS POLITICAL PARTIES POLITICAL POWER POLITICAL STRUCTURES POLITICIANS PRIVATE SECTOR INVOLVEMENT PROPERTY RIGHTS PUBLIC PUBLIC OFFICIALS PUBLIC SECTOR REGULATORY CAPTURE REGULATORY FRAMEWORK SECURE PROPERTY RIGHTS SOCIAL COST SOCIAL WELFARE STATE INSTITUTIONS STATE POWER TAX COLLECTION TRANSITION ECONOMIES TRANSPARENCY UNOFFICIAL ECONOMY |
| spellingShingle |
ADMINISTRATIVE CORRUPTION ADMINISTRATIVE REGULATIONS ASYMMETRIC INFORMATION BRANCHES BRIBERY BRIBES BUREAUCRACY BUSINESS ENVIRONMENT CENTRAL BANK COLLECTIVE ACTION COLLUSION COMMUNIST CONSTITUENCY CORRUPT OFFICIALS CORRUPTION COUNTRY AVERAGES DECREE DECREES DEMOCRATIC ELECTIONS ECONOMIC COMPETITION ECONOMIC GROWTH EXTORTION FINANCIAL SYSTEM FIRM SIZE FIRMS FOREIGN INVESTORS FOREIGN OWNERSHIP GOVERNANCE DATA GOVERNANCE DIMENSIONS GOVERNANCE VARIABLES GROWTH RATES INSTITUTIONAL REFORMS INTERNATIONAL DEVELOPMENT LAWS LEGAL FRAMEWORK LEGAL SYSTEMS LEGISLATION LEGISLATURE MEASURING CORRUPTION MEDIA MONETARY POLICY NATIONAL LEVEL NEGATIVE EXTERNALITIES OFFICIALS PARLIAMENTARY VOTES PETTY CORRUPTION POLITICAL ACCOUNTABILITY POLITICAL COMPETITION POLITICAL CONTESTABILITY POLITICAL DYNAMICS POLITICAL ECONOMY POLITICAL INSTITUTIONS POLITICAL PARTIES POLITICAL POWER POLITICAL STRUCTURES POLITICIANS PRIVATE SECTOR INVOLVEMENT PROPERTY RIGHTS PUBLIC PUBLIC OFFICIALS PUBLIC SECTOR REGULATORY CAPTURE REGULATORY FRAMEWORK SECURE PROPERTY RIGHTS SOCIAL COST SOCIAL WELFARE STATE INSTITUTIONS STATE POWER TAX COLLECTION TRANSITION ECONOMIES TRANSPARENCY UNOFFICIAL ECONOMY Hellman, Joel S. Jones, Geraint Kaufmann, Daniel "Seize the State, Seize the Day" : State Capture, Corruption, and Influence in Transition |
| relation |
Policy Research Working Paper;No. 2444 |
| description |
The main challenge of the transition has
been to redefine how the state interacts with firms, but
little attention has been paid to the flip side of the
relationship : how firms influence the state - especially
how they exert influence on, and collude with public
officials to extract advantages. Some firms in transition
economies have been able to shape the rules of the game to
their own advantage, at considerable social cost, creating
what the authors call a "capture economy" in many
countries. In the capture economy, public officials, and
politicians privately sell under-provided public goods, and
a range of rent-generating advantages "a la carte"
to individual firms. The authors empirically investigate the
dynamics of the capture economy, on the basis of new
firm-level data from the 1999 Business Environment and
enterprise performance survey (BEEPS), which permits the
unbundling of corruption into meaningful, and measurable
components. they contrast state capture (firms shaping, and
affecting formulation of the rules of the game through
private payments to public officials, and politicians) with
influence (doing the same without recourse to payments), and
with administrative corruption ("petty" forms of
bribery in connection with the implementation of laws,
rules, and regulations). They develop economy-wide measures
for these phenomena, which are then subject to empirical
measurement utilizing the BEEPS data. State capture,
influence, and administrative corruption are all shown to
have distinct causes, and consequences. Large incumbent
firms with formal ties to the state tend to inherit
influence as a legacy of the past, and tend to enjoy more
secure property, and contractual rights, and higher growth
rates. To compete against these influential incumbents, new
entrants turn to state capture as a strategic choice - not
as a substitute for innovation, but to compensate for
weaknesses in the legal, and regulatory framework. When the
state under-provides the public goods needed for entry and
competition, "captor" firms purchase directly from
the state, such private benefits as secure property rights,
and removal of obstacles to improved performance - but only
in a capture economy. Consistent with empirical findings in
previous research on petty corruption, administrative
corruption - unlike both capture and influence - is not
associated with specific benefits for the firm. The focus of
reform should be shifted toward channeling firms'
strategies in the direction of more legitimate forms of
influence, involving societal "voice",
transparency reform, political accountability, and economic
competition, Where state capture has distorted reform to
create (or preserve) monopolistic structures, supported by
powerful political interests, the challenge is particularly daunting. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Hellman, Joel S. Jones, Geraint Kaufmann, Daniel |
| author_facet |
Hellman, Joel S. Jones, Geraint Kaufmann, Daniel |
| author_sort |
Hellman, Joel S. |
| title |
"Seize the State, Seize the Day" : State Capture, Corruption, and Influence in Transition |
| title_short |
"Seize the State, Seize the Day" : State Capture, Corruption, and Influence in Transition |
| title_full |
"Seize the State, Seize the Day" : State Capture, Corruption, and Influence in Transition |
| title_fullStr |
"Seize the State, Seize the Day" : State Capture, Corruption, and Influence in Transition |
| title_full_unstemmed |
"Seize the State, Seize the Day" : State Capture, Corruption, and Influence in Transition |
| title_sort |
"seize the state, seize the day" : state capture, corruption, and influence in transition |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2000/09/693317/seize-state-seize-day-state-capture-corruption-influence-transition http://hdl.handle.net/10986/19784 |
| _version_ |
1764440713692446720 |
| spelling |
okr-10986-197842021-04-23T14:03:44Z "Seize the State, Seize the Day" : State Capture, Corruption, and Influence in Transition Hellman, Joel S. Jones, Geraint Kaufmann, Daniel ADMINISTRATIVE CORRUPTION ADMINISTRATIVE REGULATIONS ASYMMETRIC INFORMATION BRANCHES BRIBERY BRIBES BUREAUCRACY BUSINESS ENVIRONMENT CENTRAL BANK COLLECTIVE ACTION COLLUSION COMMUNIST CONSTITUENCY CORRUPT OFFICIALS CORRUPTION COUNTRY AVERAGES DECREE DECREES DEMOCRATIC ELECTIONS ECONOMIC COMPETITION ECONOMIC GROWTH EXTORTION FINANCIAL SYSTEM FIRM SIZE FIRMS FOREIGN INVESTORS FOREIGN OWNERSHIP GOVERNANCE DATA GOVERNANCE DIMENSIONS GOVERNANCE VARIABLES GROWTH RATES INSTITUTIONAL REFORMS INTERNATIONAL DEVELOPMENT LAWS LEGAL FRAMEWORK LEGAL SYSTEMS LEGISLATION LEGISLATURE MEASURING CORRUPTION MEDIA MONETARY POLICY NATIONAL LEVEL NEGATIVE EXTERNALITIES OFFICIALS PARLIAMENTARY VOTES PETTY CORRUPTION POLITICAL ACCOUNTABILITY POLITICAL COMPETITION POLITICAL CONTESTABILITY POLITICAL DYNAMICS POLITICAL ECONOMY POLITICAL INSTITUTIONS POLITICAL PARTIES POLITICAL POWER POLITICAL STRUCTURES POLITICIANS PRIVATE SECTOR INVOLVEMENT PROPERTY RIGHTS PUBLIC PUBLIC OFFICIALS PUBLIC SECTOR REGULATORY CAPTURE REGULATORY FRAMEWORK SECURE PROPERTY RIGHTS SOCIAL COST SOCIAL WELFARE STATE INSTITUTIONS STATE POWER TAX COLLECTION TRANSITION ECONOMIES TRANSPARENCY UNOFFICIAL ECONOMY The main challenge of the transition has been to redefine how the state interacts with firms, but little attention has been paid to the flip side of the relationship : how firms influence the state - especially how they exert influence on, and collude with public officials to extract advantages. Some firms in transition economies have been able to shape the rules of the game to their own advantage, at considerable social cost, creating what the authors call a "capture economy" in many countries. In the capture economy, public officials, and politicians privately sell under-provided public goods, and a range of rent-generating advantages "a la carte" to individual firms. The authors empirically investigate the dynamics of the capture economy, on the basis of new firm-level data from the 1999 Business Environment and enterprise performance survey (BEEPS), which permits the unbundling of corruption into meaningful, and measurable components. they contrast state capture (firms shaping, and affecting formulation of the rules of the game through private payments to public officials, and politicians) with influence (doing the same without recourse to payments), and with administrative corruption ("petty" forms of bribery in connection with the implementation of laws, rules, and regulations). They develop economy-wide measures for these phenomena, which are then subject to empirical measurement utilizing the BEEPS data. State capture, influence, and administrative corruption are all shown to have distinct causes, and consequences. Large incumbent firms with formal ties to the state tend to inherit influence as a legacy of the past, and tend to enjoy more secure property, and contractual rights, and higher growth rates. To compete against these influential incumbents, new entrants turn to state capture as a strategic choice - not as a substitute for innovation, but to compensate for weaknesses in the legal, and regulatory framework. When the state under-provides the public goods needed for entry and competition, "captor" firms purchase directly from the state, such private benefits as secure property rights, and removal of obstacles to improved performance - but only in a capture economy. Consistent with empirical findings in previous research on petty corruption, administrative corruption - unlike both capture and influence - is not associated with specific benefits for the firm. The focus of reform should be shifted toward channeling firms' strategies in the direction of more legitimate forms of influence, involving societal "voice", transparency reform, political accountability, and economic competition, Where state capture has distorted reform to create (or preserve) monopolistic structures, supported by powerful political interests, the challenge is particularly daunting. 2014-08-27T20:34:53Z 2014-08-27T20:34:53Z 2000-09 http://documents.worldbank.org/curated/en/2000/09/693317/seize-state-seize-day-state-capture-corruption-influence-transition http://hdl.handle.net/10986/19784 English en_US Policy Research Working Paper;No. 2444 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |