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Anticorruption in Transition 3 – Who is Succeeding … And Why?. World Bank, November 2006. www.worldbank.org/eca/act3. The Big Questions. Is corruption in Eastern Europe and the former Soviet Union – including Moldova – getting better or worse? What explains the changes?.

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Anticorruption in Transition 3 – Who is Succeeding … And Why?

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Anticorruption in Transition 3 – Who is Succeeding … And Why?

World Bank, November 2006

www.worldbank.org/eca/act3


The Big Questions

Is corruption in Eastern Europe and the former Soviet Union

– including Moldova –

getting better or worse?

What explains the changes?


A Tool for Monitoring Corruption

“Business Environment and

Enterprise Performance Survey” (BEEPS)

  • Joint initiative with EBRD

  • 20,000 firms in 3 rounds (1999, 2002, 2005)

  • 26 transition countries

  • 6 European comparators in ‘05: Ireland, Germany, Greece, Portugal, Spain, Turkey (+ Korea and Vietnam)

  • Focus on corruption in enterprise-state interactions


Corruption Indicators used in BEEPS

  • Frequency of bribery

    • Tax

    • Customs

    • Business Licensing

    • Procurement

    • Judiciary

  • Bribe “tax”

  • State capture

  • Corruption as a problem for business


Is corruption getting better or worse?

…and how do transition countries compare with European comparators?


Corruption is falling for the region as a whole(though not yet to W. Europe levels)…

Source: Anticorruption in Transition 3 – Who is Succeeding … and Why?


… but not in all countries …

Bribe Frequency by country, 2002-2005

Source: Anticorruption in Transition 3 – Who is Succeeding … and Why?


… and not in all sectors.

Bribe Frequency by sector, 2002-2005

Source: Anticorruption in Transition 3 – Who is Succeeding … and Why?


Many Moldovan firms see corruption as a problem for business…but fewer than in 2005.

Source: Anticorruption in Transition 3 – Who is Succeeding … and Why?


Moldovan firms report the highest levels of corruption in the following areas:

  • Customs(improving but still high)

  • Business licensing(no change over 3 years)

  • Tax(major improvement but still significant)

  • Government procurement(rising)

    …and state capture is still relatively high in Moldova and other SEE countries.


New private firms continue to pay the most bribes.

Source: Anticorruption in Transition 3 – Who is Succeeding … and Why?


Why the improvement in ECA?


“Doing Business”

Survey of accountants and lawyers on time and cost of:

Starting a business

Dealing with licenses

Hiring and firing

Registering property

Getting credit

Protecting investors

Paying taxes

Trading across borders

Enforcing contracts

Closing a business

A Tool for Monitoring Policies and Institutions


Transition countries lead the world in business-friendly policy reforms…

Source: Doing Business in 2007


3 of the top 10 reformers in 2005 were in ECA…

1. Georgia

2. Romania

3. Mexico

4. China

5. Peru

6. France

7. Croatia

8.Guatemala

9. Ghana

10. Tanzania

Source: Doing Business, 2007


… and reforms are in many areas.

  • Tax

    • Low rate, broad based taxes (e.g. Baltics and Slovakia)

  • Customs

    • IT, risk-weighted inspections (SE Europe)

  • Regulatoryenvironment

    • deregulation; less frequent inspections (Georgia)

  • Courts

    • independence, efficiency, transparency (Romania)

  • Procurement

    • transparency and capacity-building (Poland)


However, the ease of doing business still varies widely among countries.

Lithuania 16

Source: Doing Business in 2007


Moldova ranks well in a fewpolicy areas but not most…[note: lower score is better]

Source: Doing Business in 2007


… and some progress has been made in addressing accountability and transparency.

Source: World Bank project on Actionable Indicators; update of Dorhoi (2005)


What motivates change?


The “carrot” of EU Accession has been a strong motivator of reform.

Source: Anticorruption in Transition 3 – Who is Succeeding … and Why?; based on the Anticorruption Assessment Index in Dorhoi (2005).


Most importantly, every country that has made significant progress has hadstrong and committed leadership.


To summarize

  • Corruption in enterprise-state relations is falling in many transition countries...including Moldova.

    • but wide variation among sectors

  • Policy and institutional reforms matter.

    • Customs, business licensing, taxation, and public procurement are some key areas for Moldova

  • Strong leadership is essential, and countries need to continue their efforts.

    • Still a distance from EU norms

    • Complacency is not an option in today’s globalized world


Anticorruption in Transition 3:Who is Succeeding … And Why?

www.worldbank.org/eca/act3

For more information on

economic policy and governance:

www.worldbank.org/eca/econ


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