The following contains key Issues to be emphasized by Dr. Daniel Kaufmann during his keynote dinner speech at the Caesarea Forum, on June 27th, 2007
Daniel Kaufmann is a guest of honor at the 2007 Caesarea Forum, being held this year in Haifa on June 27-28th. He is a renowned world expert on governance and corruption, with a distinguished career at the World Bank, where he currently serves as Director of the Institute. He has pioneered the measurement, analysis, and operational research in governance and corruption, and advises various countries.
He is known for speaking truth to power, emphasizing that the example of good governance has to first be set at home; that an institution like the World Bank, working on this issue globally, has to practice what it preaches in order for it to be credible and effective. During the recent scandal that erupted at the World Bank, in which the outgoing President, Wolfowitz, had approved an oversized promotion and pay package for his girlfriend, Daniel Kaufmann was called on by the Board of Executive Directors to act to restore leadership and integrity at the Bank. Wolfowitz is now stepping down, and Robert Zoellick is now poised to take the helm of the World Bank.
“The strength of governance of an institution or country is not measured by the complete absence of corruption or scandals, which at times can take place anywhere,” he says. “Instead, the resilience of an institution is shown in its ability to admit failure, to learn from crisis, and to then decisively implement needed reforms, progressing onto a higher level of integrity and effectiveness.” Drawing on recent lessons, and new leadership, Kaufmann believes that currently there is an opportunity to learn from the crisis and implement internal governance reforms, thereby strengthening the Bank’s ability to work with countries on these issues.
Countries, such as Israel, and their governments and leaders can also benefit from such a vision of turning a crisis into a window of opportunity for reform. Kaufmann provides the example of Chile, where he was born and raised, which has experienced a few corruption scandals in recent years. The democratically elected leadership turned a few scandals into opportunities for reforming recruitment to the civil service, public procurement, and political campaign finance. Nowadays, Chile rates at the top of all emerging economies on governance and anticorruption, and is quite ahead of a number of rich OECD economies.
The power of data is critical for speaking truth to power and for informing and influencing policy-makers to act on governance and controlling corruption. Kaufmann and his colleagues have developed the largest available worldwide governance database, covering 6 aggregate indicators (measuring rule of law, corruption, voice and democratic accountability, regulatory quality, political stability, and absence of violence), and multiple specific indicators. From this database Kaufmann derived the estimate of one trillion dollars in annual bribery worldwide.
His work with various colleagues has also demonstrated the enormous impact of controlling corruption and good governance on a country’s growth: the so called “300 percent income dividend from good governance,” whereby he and his co-author Kraay estimate that if a country implements reforms to improve governance or corruption control by one standard deviation, taking a country, such as Israel, from their current level of controlling corruption, to the higher level of Canada, or the current level of Rule of Law in Israel to the level of the Netherlands, the resulting increase in per capita incomes in the long run may be three-fold. Kaufmann and his colleagues find that improving governance and controlling corruption also has large payoffs in reducing income inequality and infant mortality, and enhances a country’s global competitiveness and foreign and domestic investment.
The governance indicators prepared annually by Dr. Kaufmann and his colleagues portray a mixed picture of the quality of governance in Israel today. On some level, it is utter nonsense for anybody to suggest that Israel is endemically corrupt or systemically misgoverned; the cross country