 In Europe and Central Asia, the radical shift in economic and political systems that occurred in most countries after 1990 has made existing forms of corruption more visible, but also opened opportunities for new forms of corrupt practices. At the same time, the transition to democracy and market economies demanded complete transformation of these institutions and threw up new challenges of governance.
During the first decade of transition, as the countries engaged in redefining rules and institutions, corruption had a significant impact on this process, encoding advantages for vested interests and distorting the path of economic and political development. Media reports throughout the region told of state capture as powerful firms and individual oligarchs buying off politicians and bureaucrats to shape the legal, policy and regulatory environments in their own interest. At the same time, avenues for administrative corruption flourished as public institutions began to embody greater flexibility associated with managing a market, rather than a command economy, and required new frameworks for oversight and accountability. A decade and more into transition has revealed that corruption continues to undermine developmental goals by weakening public service delivery, misdirected public resources, and deterred new investments. As such, restraining corruption and improving governance is now widely viewed as a necessary condition for long-term economic growth and poverty reduction. However, some countries in the region have made significant progress on this front. With the support of the World Bank, they have formulated a new approach to anti-corruption that is being emulated across the world. The first step is open and participatory diagnostics, including the use of surveys, which focus on the causes of different types of corruption, and that help to depoliticize the issue. The second step is a multi-pronged strategy that addresses political accountability, civil society participation, institutional restraint, public sector management and promotes a competitive private sector, all underpin by strong leadership. Corruption is a persistent problem that continues to plague even developed economies and political systems. As such it requires as a third step, a continuous focus on implementation, monitoring and adjusting the strategy. As a result of these efforts, recent evidence indicates that some types of corruption are beginning to moderate in many countries in the region. Managers' surveyed responses in almost half of the transition countries suggest a decline between 1999 and 2002 in the overall frequency of bribery and the impact of corruption on their business. However, that there is no cause for complacency as levels of corruption – both state capture and administrative corruption -- remain high in many countries and in many sectors of the economy. For example, while bribes appear less prevalent for public services, for example, they appear more common for taxes and procurement. Nor is the news universally positive at the country level – some indicators of corruption suggest a worsening of the problem in South East Europe. Notwithstanding what may be happening to the trends, the levels remain problematic. Firms in most transition countries still view corruption as a formidable obstacle, among the most severe they face. |
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