What If? A Look at Integrity Pacts

This note examines the Integrity Pact (IP) methodology proposed by Transparency International to confront the problem of corruption in public procurement. The examination draws from a decision model for participants developed elsewhere, in which the critical elements are shown to be the vulnerability of the conditions under which the tender is conducted and the risk of bribing. The IP methodology intends to interfere with the central elements in individual tender instantiations by a process of discussion leading to mutual trust; participants and public officials sign a pledge of honesty. Disputes are to be resolved by private arbitration and allegedly enforcement is attained by force of a private contract between participants. Preferably, a civil society organization stimulates and monitors the process and acts as fiducial guarantor. Publicising proceedings stimulates discus-sion and enhances transparency. All this is held to favourably affect the process, leading to better results. This, in turn, is held to affect the overall environment over time. In order to accommodate for the ethical dimension introduced by IPs, the present analysis incorporates an “ethical” factor operating over the conditions under which tenders are conducted. Ascertaining the operation of this hypothetical factor is an empirical question. The examination of IP premises, together with evidence collected from instantiations of the meth-odology, plus the absence of comparative empirical data on bribery, leads to the conclusion that IPs do not heighten the risk of bribing for participants. Contrary to the methodology’s claim, en-forcement, be it from arbitration or otherwise, is shown to be dependent on each particular envi-ronment. Conditions under which particular tenders are conducted might be bettered, but not un-conditionally, as the institutional framework perforce dominates private agreements. The influence of the “ethical” factor cannot be assessed for lack of empirical evidence, and the honesty pledge IPs rely on is argued to be devoid of significance. Although for lack of data the economic effi-ciency of the methodology cannot be ascertained, there is no reason to suppose that IPs do not bet-ter the outcomes piecewise. The methodology fails to address the problem of cartelisation that af-fects public markets, and – perhaps due to the low frequency of its application – does not discuss measures to counterbalance the action of cartels. Interpreting the premises behind the IP idea, it is argued that they stem from a perspective on cor-ruption rooted on morality rather than on the mechanisms that propitiate bribery. Thus, tackling individual instantiations is favoured over confronting systemic factors. IP guidelines stipulate that the absence of allegations of bribery in a tender authorises the sponsor-ing NGO to announce that the tender was “clean”. It is argued that such manifestations of overcon-fidence are hazardous for the reputation of NGOs that adopt the methodology. It is also argued that the continuous involvement of NGOs with IPs raises questions about their entitlement to it, more-over because NGOs are not bound by oversight and accountability constraints that formally charac- terise State organisms. It is contended that for both governments and NGOs, promoting and par-ticipating in IPs is a strategic decision that should be balanced with their effectiveness towards the aim of changing the institutional environment.Control, corruption, integrity pact, public procurement, regulation, Transparency International

Big Data, Small Credit: The Digital Revolution and Its Impact on Emerging Market Consumers

This research report sheds light on a new cadre of technology companies who are disrupting the credit scoring business in emerging markets. Using non-financial data -- such as social media activity and mobile phone usage patterns -- complex algorithms and big data analytics are forever changing the economics of how we identify, score, and underwrite credit to consumers who have been invisible to lenders until now

Implementing a subnational results-oriented management and budgeting system. Lessons from Medellín, Colombia.

"The purpose of this paper is to describe the budget process reform implemented in Medellín, and to analyze its actual performance and evaluate its success. The reform is changing the way public resources are allocated and executed, while gradually institutionalizing supply and demand-side practices beyond the government´s political cycles.This paper describes and analyzes how the RoB was designed and implemented, and the achievements of the system to date, in terms of resource allocation and the policy-making process. The following section describes the context of Medellín: political and economic trends, and the objectives of the budget reform. The third section presents the state of the budget process in Medellín as it was diagnosed before implementation. Section four describes the implementation process of the system, and section five addresses its major achievements. A final section includes some policy recommendations, which can be divided into two parts: (i) recommendations for consolidating the system as a main support tool of a RoM approach, and (ii) recommendations for replicating the system in other municipalities and subnational governments".Budget process reform, Budget reform, Medellín, Colombia

Leaving the nest: the rise of regional financial arrangements and the future of global governance

This article examines the impact of regional financial arrangements (RFAs) on the global liquidity regime. It argues that the design of RFAs could potentially alter the global regime, whether by strengthening it and making it more coherent or by decentring the International Monetary Fund (IMF) and destabilizing it. To determine possible outcomes, this analysis deploys a ‘middle‐up’ approach that focuses on the institutional design of these RFAs. It first draws on the rational design of institutions framework to identify the internal characteristics of RFAs that are most relevant to their capabilities and capacities. It then applies these insights to the interactions of RFAs with the IMF, building on Aggarwal's (1998) concept of ‘nested’ versus ‘parallel’ institutions, to create an analytical lens through which to assess the nature and sustainability of nested linkages. Through an analysis of the Chiang Mai Initiative Multilateralization (CMIM) and the Latin American Reserve Fund (FLAR), the article demonstrates the usefulness of this lens. It concludes by considering three circumstances in which fault lines created by these RFAs’ institutional design could be activated, permitting an institution to ‘leave the nest’, including changing intentions of principals, creation of parallel capabilities and facilities, and failure of the global regime to address regional needs in a crisis.The authors would like to thank Veronica Artola, Masatsugu Asakawa, Ana Maria Carrasquilla, Junhong Chang, Paolo Hernando, Hoe Ee Khor, Kazunori Koike, Jae Young Lee, Ser-Jin Lee, Guillermo Perry, Yoichi Nemoto, Freddy Trujillo, Masaaki Watanabe, Yasuto Watanabe, Akihiko Yoshida, and others who wished to remain anonymous, for their generosity in providing in-person interviews. Further, the authors would like to thank various central bank and ministry of finance officials of both FLAR and CMIM member countries. We also thank Jose Antonio Ocampo, Diana Barrowclough, and participants in the 'Beyond Bretton Woods' Workshop at Boston University (where an earlier version of this article was presented in September 2017) for their feedback on our broader research projects on RFAs. Last but not least, the authors wish to thank the anonymous referees for their constructive comments. This work builds upon previous work funded by UNCTAD and the Global Economic Governance Initiative at the Global Development Policy Center at Boston University. (UNCTAD; Global Economic Governance Initiative at the Global Development Policy Center at Boston University)Accepted manuscrip

State of Watershed Payments: An Emerging Marketplace

A global research effort conducted by Ecosystem Marketplace identified a total of approximately 288 payments for watershed services (PWS) and water quality trading (WQT) programs in varying stages of activity over the past 30 years. In 2008, the baseline year, about 127 programs were actively receiving payments or transacting credits. The total transaction value from all programs actively engaged in 2008 is estimated at US$9.3 billion. Over the entire time span of recorded activity, total transaction value is estimated at slightly more than US$50 billion, impacting some 3.24 billion hectares

Paths to Fisheries Subsidies Reform: Creating Sustainable Fisheries Through Trade and Economics

The world depends on the oceans for food and livelihood. More than a billion people worldwide depend on fish as a source of protein, including some of the poorest populations on earth. According to the United Nations Food and Agriculture Organization (FAO), the world must produce 70 percent more food to meet coming hunger needs.Fishing activities support coastal communities and hundreds of millions of people who depend on fishing for all or part of their income. Of the world's fishers, more than 95 percent engage in small-scale and artisanal activity and catch nearly the same amount of fish for human consumption as the highly capitalized industrial sector. Small-scale and artisanal fishing produces a greater return than industrial operations by unit of input, investment in catch, and number of people employed.Today, overfishing and other destructive fishing practices have severely decreased the world's fish populations. The FAO estimates that 90 percent of marine fisheries worldwide are now overexploited, fully exploited, significantly depleted, or recovering from overexploitation

Shaping Inclusive Markets: How Funders and Intermediaries can Help Markets Move toward Greater Economic Inclusion

Positive progress toward worldwide economic inclusion is not only possible, but can also be made more possible. In Shaping Inclusive Markets, we draw lessons from history on how more inclusive markets have been achieved and highlight ways in which funders and intermediaries can strengthen the conditions for change

Entrepreneurial Activity and Civil War in Colombia: Exploring the Mutual Determinants between Armed Conflict and the Private Sector

TAs elsewhere, the Colombian private sector has been accused of promoting or profiting from violence in the country. However, the private sector’s role in the armed conflict and the impact of conflict on entrepreneurial activity vary, as reflected by differences in political activism, in peacebuilding strategies and in costs endured according to company size, sector, and region of operations. At the same time, accounts of regional variation in conflict intensity suggest that an understanding of the Colombian confrontation requires a subnational approach. This paper explores whether and how differences in regional armed armed conflict can be attributed to differences in entrepreneurial make-up and activity associated with five natural resources, produced in different regions (oil, coffee, bananas, emeralds, and flowers). This paper suggests that company-specific traits, institutions of production, and the nature of international markets have a significant impact on the link between entrepreneurial activity and armed conflict in Colombian regions.Colombia, armed conflict, entrepreneurship, private sector, natural resources, multinational companies

Latin American universities and the third mission : trends, challenges, and policy options

Universities in Latin America are increasingly considered instruments of social and economic development and face rising expectations in regard to supplying relevant skills, undertaking applied research, and engaging in commercial activity. The paper discusses trends and challenges within Latin American universities, as well as policy options available for strengthening their contributions to social and economic development. The so-called third mission of universities is often equated with knowledge transfer narrowly defined as licensing and commercialization of research. The paper adopts a broader approach and explores how the new role of universities affects all aspects of academic practice in Latin America, including advanced education and research. It concludes that policymakers and university managers in Latin America face an important challenge of defining a legal framework, sound management procedures, and notably, incentive systems that stimulate outreach and entrepreneurship among students and staff while recognizing and preserving the distinct roles of universities.Tertiary Education,Agricultural Knowledge&Information Systems,Rural Development Knowledge&Information Systems,ICT Policy and Strategies,Secondary Education