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Comparative studies of corruption_ The role of the researcher

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Comparative studies of corruption:The role of the researcher
Natasha Chichilnisky-Heal July 31, 2013
My Background
ComparativistOriginal focus on former USSR regionWork in mining & energy, microfinance, clean techExposure to private sector, public sector, and academiaThree cases:Mongolia (94 = rank in Transparency International 2012 Corruption Perceptions Index)Zambia (88)Argentina (102)
Why Comparative Studies?
Point-by-point and holistic comparison of corruption cases across time or spaceComparisongeneralizabilityTheory-buildingTheory-testingTraction on both small-N and large-N analyses
Comparative Studies
Can be top-down or bottom-upTop-down:public procurementin India vs. ChinaBottom-up: public procurement inIndiavs. public procurement inChinaCan be historical or geographicalHistorical: USA in 19thCentury vs. USA in 20thCenturyGeographical: 20thCentury New York vs. 20thCentury Chicago
Role of Researcher
Researcher or AnalystAcademic, private sector, or public sectorCombination (i.e., “PPPs”)Purpose: to identify patterns in corruption cases for use in designing intervention strategiesAmericanfederalanti-corruption strategy can benefit from comparative historical and geographical analysis of corruptionAcross states in particular
Role of Researcher
Comparative analysis ofexisting studiesorConstruction ofnew casesWhat are the challenges in each type of analysis?
Challenges: Existing Studies
Identifying comparable pointsExtrapolating patterns within each studyMicrofinance:Fraud detected inMFIsin Azerbaijan and NicaraguaTop-down comparability = highFruit of comparative analysis: patterns in financial statements that indicate fraud regardless of region or MFI specifics
Challenges: New Cases
Time & moneyDeep sector-specific knowledgeIf new because contemporary, lack of simultaneous studies for verificationMiningMongolian mining sector in 1990s vs. late 2000sBottom-up comparability = highFruit of comparative analysis: patterns that transcend changes from 90s to 00s have great durability
Role of Researcher: Private
Private sectorDue diligenceFinancial, technical, organizationalProprietary data concernsFiduciary responsibilityForeign Corrupt Practices ActComplianceProfitability
Role of Researcher: Public
Public sectorAbuse of power/privilegesNepotismBriberyTheft of public fundsTheft of public assetsFalse disclosure
Role of Researcher: “PPPs”
Contract awarding (Zambia lawyer)License awarding (Zambia copper)Zoning or construction permits (Mongolia building)Patent processing (China tech)Intellectual property (India pharmaceuticals)Aid distribution (DRC rice)
Cases: Private
Microfinance:Azeri MFI shows slightly higher rates ofNPLsInitial queries are answered with allusion to economyOn-the-ground DD shows falsified documentationlarge-scale fraudNicaraguan MFI shows rapidly increasing rates ofNPLsInitial queries answeredwallusion to “No Pago” movementOn-the-ground DD shows ghost loanslarge-scale fraud
Cases: Private
Main obstacles:DD requires time and money – private sector in this case has no other checks in placeMust check every case of risingNPLsMain lessons:MFIsuse nation-wide problems as façade to cover fraudFraud is perpetrated in same way across continents
Cases: Public
Mining/Regulation:World Bank is main player in guiding evolution of mining regulation in MongoliaWB internal regulations prevent use of WB resources for private gainSenior mining specialist in WB pushes for legislation favorable to 1 mining companyOnce legislation is passed, stock prices go up, specialist joins board of mining company
Cases: Public
Main obstacles:No obstacle to detection – obstacle to prevention (ability to penalize corruption)In case of grand corruption of government officials, financial disclosure requirements have blunt teeth“He-said, She-said” casesFormer Mongolian PresidentEnkhbayarMain lessons:Competition among public sector elites is positive, dredges up information on accountability
Energy:Proposal made to Mongolian government to build coal liquefaction plantPatented technology process presented to governmentSecond bidder bribes MRPAM officialOfficial shares patented processwsecond bidderFirst bidder eliminated, second bidder wins contract, official keeps bribe
Main obstacles:Unlikely to be investigated/penalized unless catastropheZCCM-IH – public and private shareholdersWho is to blame? Public or Private?Unsophisticated banking systemMain lessons:Non-disclosure agreementswofficials should be more explicit about tech processes and realistic about jurisdictionBureaucrats in former USSR region desensitized toward corruption
Role of Researcher: Conclusions
Most large cases fall into PPP categoryResearchers from either private or public sector may miss key info from other sectorRequire cooperation from private sector in public casesResearcher must choose comparison carefullyWant comparison that will have greatest yield on problem of interestAnti-corruption measure works in Argentina but not Chile; geographicalAnti-corruption measure used to work and no longer does; historicalNew anti-corruption measure; combine geographical and historical
Role of Researcher: Conclusions
Building new cases and conducting comparison with existing cases is strongest analytical strategyCombine top-down with bottom-upComparative analysistheory-building in cases with little previous study, theory-testing in cases with extensive literatureOpen competition can flush out data that would otherwise remain hidden





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Comparative studies of corruption_ The role of the researcher