Sensitivity of the Control of Corruption Indicator and its Sub-Sources to

Discrete Corruption-Related Events

Prepared for the Millennium Challenge CorporationBy

Katie CaryConstance Chucholowski

Ryan HohlerJiaqi Lu

Malika Talbi

ROADMAP• Background • WGI Control of Corruption Indicator• Methodology and Limitations• Case Study Analysis• Sub-source and General Findings• Recommendations

BACKGROUND• Millennium Challenge Corporation

- Ex-post aid- CoC as “hard-hurdle” for Compact assistance

CORRUPTION

Source: corruptionsucks.blogspot

• Common definition: abuse of public power for private gain

• Corruption inhibits growth

Control of Corruption Indicator & Sub-Sources CoC

EIU

GCB

FRH

CCR

BTI

BPS

ASD

AFR

ADB

WMO

PRS

IPDGWP GCS

GII

RESEARCH QUESTION

• Do the Control of Corruption Indicator and its sub-sources show sensitivity to discrete corruption-related events (CREs)?

METHODOLOGY• Purposive Sampling – Ponzi scheme in Benin (2010)– Sponsorship scandal in Canada (2003)– Anti-corruption reforms in Georgia (2004)– “Credible” signal reforms in Kenya (2003)

• Needle-jump – Post liberalization reforms in Serbia (2000)

LIMITATIONS

• Lack of external validity

• Sampling biases

• Data inaccessibility

• Non-causal identification

SCANDAL IN BENIN

• Micro-lending bank discovered to be Ponzi scheme

• President Yayi involvement• Approximately USD $327M

BENIN – CONTROL OF CORRUPTION CHANGES

2008 (y-2) 2009 (y-1) 2010* 2011 (y+1) 2012 (y+2)

-1-0.9-0.8-0.7-0.6-0.5-0.4-0.3-0.2-0.1

0Control of Corruption

Control of Corruption

BENIN – CHANGES IN SUB-SOURCE DATA

2008 (y-2) 2009 (y-1) 2010* 2011 (y+1) 2012 (y+2)0

0.1

0.2

0.3

0.4

0.5

0.6

AFRGCSGWP

SCANDAL IN CANADA

• Sponsorship Scandal• Provided payoffs and kickbacks to party

supporters • Reflected in the data, but quick recovery

CANADA – CONTROL OF CORRUPTION CHANGES

2000 (y-3)

2002 (y-1)

2003* 2004 (y+1)

2005 (y+2)

2006 (y+3)

2007 (y+4)

2008 (y+5)

0

0.5

1

1.5

2

2.5Control of Corruption

Control of Corruption

CANADA – CHANGES IN SUB-SOURCE DATA

2000 (y-3)

2002 (y-1)

2003* 2004 (y+1)

2005 (y+2)

2006 (y+3)

2007 (y+4)

2008 (y+5)

0

0.2

0.4

0.6

0.8

1

1.2

PRSWMOWCY GCS

REFORMS IN GEORGIA

• 2003 Rose Revolution• Overhaul of police system, drastic decrease

in petty bribery• Heralded as anti-corruption success

GEORGIA – CONTROL OF CORRUPTION CHANGES

2002 (y-2)

2003 (y-1)

2004* 2005 (y+1)

2006 (y+2)

2007 (y+3)

2008 (y+4)

2009 (y+5)

-1.2

-1

-0.8

-0.6

-0.4

-0.2

0

Control of Corruption

Control of Corruption

GEORGIA – CHANGES IN SUB-SOURCE DATA

2002 (y-2)

2003 (y-1)

2004 * 2005 (y+1)

2006 (y+2)

2007 (y+3)

2008 (y+4)

2009 (y+5)

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

BPSGCSWMOFRH

REFORMS IN KENYA

• Kibaki anti-corruption election platform• Establishment of Kenyan Anti-Corruption

Commission and appointment of Permanent Secretary for Governance and Ethics

• Business as usual

KENYA – CONTROL OF CORRUPTION CHANGES

2000 (y-3)

2002 (y-1)

2003* 2004 (y+1)

2005 (y+2)

2006 (y+3)

2007 (y+4)

2008 (y+5)

-1.2

-1

-0.8

-0.6

-0.4

-0.2

0Control of Corruption

Control of Corruption

KENYA – CHANGES IN SUB-SOURCE DATA

2000 (y-3)

2002 (y-1)

2003* 2004 (y+1)

2005 (y+2)

2006 (y+3)

2007 (y+4)

2008 (y+5)

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

GCSPRSCCRAFRBTIWMO

KENYA SUB-SOURCE DATA – PRS vs. GCS

2003* 2004 (y+1) 2005 (y+2) 2006 (y+3) 2007 (y+4) 2008 (y+5) 0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

PRSGCS

REFORMS IN SERBIA

• Removal of Milosevic • Economic liberalization and broad anti-

corruption reforms• Continued corruption

SERBIA – CONTROL OF CORRUPTION CHANGES

1998 (y-2) 2000* 2002 (y+2) 2003 (y+3) 2004 (y+4) 2005 (y+5)

-1.2

-1

-0.8

-0.6

-0.4

-0.2

0

Control of Corruption

Control of Corruption

SERBIA – CHANGES IN SUB-SOURCE DATA

1998 (y-2) 2000* 2002 (y+2) 2003 (y+3) 2004 (y+4) 2005 (y+5) 0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

BPSFRH

CONTROL OF CORRUPTION TRENDS IN ALL CASE STUDY COUNTRIES

-1.4

-1.2

-1

-0.8

-0.6

-0.4

-0.2

0

0.2

0.4

CoC-BeninCoC-SerbiaCoC-KenyaCoC-Georgia

SUB-SOURCE FINDINGS

GENERAL FINDINGS

• Non-uniform responsiveness• UCM weighting• Bias toward long-term sustainable change• Connection between CREs and other

events too difficult to disaggregate

RECOMMENDATIONS1) Complete additional research2) Evaluate continued efficacy and

construct validity of CoC to MCC objectives

3) Further analysis on correlation of CoC to other governance indicators

QUESTIONS?

ADDITIONAL IMAGE CITATIONS

“Georgia: The Rose Revolution Fades.” Georgia and World. August 15, 2012. Accessed on May 1, 2014. http://www.geworld.ge/View.php?ArtId=2103&lang=enFlag of Kenya. Wikipedia. Accessed on May 1, 2014. http://en.wikipedia.org/wiki/File:Flag_of_Kenya.svg

“UK Fraud Office Halts Keyna Probe.” BBC News. February 5, 2009. Accessed on May 1, 2014. http://news.bbc.co.uk/2/hi/7871697.stm

Flag of Canada. Wikipedia. Accessed on May 1, 2014. http://en.wikipedia.org/wiki/File:Flag_of_Canada.svg

“The Ontario Young Liberals Blur the Line Between Satire and Genuineness.” James W.J. Bowden’s Blog. March 29, 2014. Accessed on May 1, 2014. http://parliamentum.org/

Flag of Benin. Wikipedia. Accessed on May 1, 2014. http://en.wikipedia.org/wiki/File:Flag_of_Benin.svg“Yayi Boni.” Afrique Media Vision. Accessed on May 1, 2014. http://gontran.blogspot.com/

Flag of Serbia. Wikipedia. Accessed on May 1, 2014. http://en.wikipedia.org/wiki/File:Flag_of_Serbia.svg

“Croatian Show Documents Djinjic Murder.” B92. February 12, 2008. Accessed on May 1, 2014. http://www.b92.net/eng/news/region.php?yyyy=2008&mm=02&dd=12&nav_id=47647

ADDITIONAL IMAGE CITATIONS, ctd. • Afrobarometer logo. Afrobarometer. Accessed on May 1, 2014.

http://www.afrobarometer.org/• Freedom House logo. Freedom House. Accessed on May 1, 2014.

http://www.freedomhouse.org/• Economist Intelligence Unit logo. Economist Intelligence Unit. Accessed on May 1,

2014. http://www.eiu.com/home.aspx• Institutional Profiles Database logo. Institutional Profiles Database. Accessed on May 1,

2014. http://www.cepii.fr/IPD.asp