Demystifying the TIB report

RECENTLY, Transparency International Bangladesh released its National Household Survey 2007 on Corruption in Bangladesh (henceforth referred to as the TIB report). As always, the report has been widely publicised and taken very seriously by different quarters, including the government.
Since the issue of corruption has been the main agenda of the caretaker government since 1/11, and the perception of pervasive corruption in Bangladesh is to a large extent based on the TIB reports, it is worthwhile that the report be carefully scrutinised, especially in terms of its methodology and findings. One has to also evaluate if the approach taken to combat corruption is a correct one, in terms of the findings and implications of the report. This short article aims to do so.
The TIB Report 2007 is basically a household survey, including 2,500 households in urban and rural areas. The objective is to assess the extent of corruption in different sectors, viz. education, public health, land administration, law enforcement agencies, judiciary, electricity, local government, tax, banking, and the NGO sector. The selection of sectors shows that the focus is on the provision of public services by the government, although the NGO sector creeps in, with no apparent purpose, unless one justifies this on account that NGOs are also major service providers.
The general methodology followed in assessing the extent of corruption in different sectors is to look at the households' interaction with each sector i.e. the type of services demanded, the forms of corruption and the incidence (extent in terms of stated frequency) of corruption. The report then focuses on bribery, the volume of bribery and if it has increased or decreased between two time periods in terms of its incidence.
First, one would like to point out that a broad-based survey like this can indicate some basic facts, but it cannot give any in-depth idea of the processes or the factors involved e.g. what induces corruption, and therefore, how to combat it, etc.
The Bangladesh Bureau of Statistics, for instance, publishes such censuses and surveys on a regular basis. A list would include the Household Income and Expenditure Survey, Bangladesh Economic Survey, Agricultural Census, Population Census, etc. These provide some basic statistics useful to researchers, but can rarely be treated as an analytical finished product. Considerable analysis and interpretation is needed before any definitive conclusion is made regarding say what is the dynamics of population change, what is happening to the agricultural sector, how to increase agricultural production, or what is the state of poverty. In this sense, it is a bit surprising that the TIB report is treated as a definitive study, with very little enquiry into the quality of data, the methodology, etc.
Next, let us look at the definition and forms of corruption discussed in the report. Corruption, as defined in the TIB report is more than bribery. It is "abuse of entrusted power for personal gain." The Oxford Advanced Learner's Dictionary similarly defines corrupt to be: "(of people) willing to use their power to do illegal or dishonest things in return for money or to get an advantage."
The report then considers six forms of corruption: bribery, negligence of duties, nepotism, embezzlement, deception, and extortion. According to the survey, 38.6% of respondents experienced bribery, while 38.3% experienced negligence of duties, while 9.8% reported embezzlement, and 8% nepotism.
It is difficult to understand why negligence of duty should be termed corruption, given the definition used in the TIB report. It is definitely bad to neglect one's duties, but the consequences depend on the extent of this neglect, and no monetary transaction or undue advantage is involved. Moreover, is it at the same level as embezzlement, bribery, or even nepotism? There is definitely a moral judgement to be made. It should also be pointed out that embezzlement, fraud, or nepotism may be much harder to detect, especially at the household level.
Moreover, while the report gives some estimate about the amount of bribery involved, it gives no indication of the extent of negligence of duty involved in the stated cases and what were the consequences of such neglect. The findings in most cases are based on peoples' perceptions or allegations.
One may note that the very fact that one has to pay bribes to gain access to a public service indicates scarcity, as much as moral degradation. In economic theory, when a factor is scarce, it generates what are called rents, i.e. a payment over and above the opportunity cost of the service (what it could have earned in its next best alternative use).
Thus, what Runa Laila or any talented singer earns is mostly rent, because her singing talent is so scarce in supply that competition cannot erode away this rent. Scarcity also generates rent-seeking behaviour. Thus agents, those who would like to access the service, and those who provide these, would both spend a lot of time and effort and money to undergo transactions. In the language of economics therefore, these (bribes) are often referred to as transaction costs.
For our purpose, what is important, are the policy implications of these transaction costs. My simple judgement tells me that if public services are scarce, so much so that a lot of resources are spent to gain access to these, one has to work towards an efficient delivery of such services. This can be done either through increased budgetary allocations or by devising efficient allocation mechanisms.
Just like if we want more talented singers like Runa Laila, we have to spend some resources in cultivating such talents. Simply moralising or throwing people in jail will not do the trick, at least with regard to public services.
May I point out at this stage that it is not only service providers or people who are in charge of these services, who are at fault. Consumers, too, pay the bribes, knowing fully well that it is not right. The most frequent reason is to "jump the queue." In other words, you do not wait for your turn or you are willing to deprive someone else of the service, someone who is more deserving, by paying the bribe. Sometimes you pay the bribe so that you are allowed to violate the law.
The example which is fresh in my mind is that of an acquaintance who paid the guard in advance, before a payment was asked for, to smoke in a forested area where smoking was forbidden. When I protested, his reaction was that he always helps poor people! Sometimes we also willingly pay once we get the service as our token of gratitude --"baksheesh." This we do, consciously perhaps, because we are aware that most employees are terribly underpaid. No wonder the law makes both the giving and taking of bribes illegal.
The TIB report can thus at best tell us that our public services need to be improved. It also indicates that some services (diagnostic tests at public hospitals) are under-priced, since people are willing to pay more for such services. It definitely cannot be used to make us feel that as a nation we are at the bottom of the ladder in terms of moral standing.
Take the case of negligence of duty for instance. If a doctor at a public hospital has to see 200 or more patients a day, compared to his counterpart in a richer country who sees 10 to 15 patients a day, how can we see his neglect as a moral degradation? Further, if we take each of the different forms of corruption separately, particularly nepotism, embezzlement, and fraud, the proportion of which is quite low according to the TIB report, it is also hard to see how Bangladesh would rank the highest.
The TIB report also does not throw much light on other much bigger games in terms of corruption, e.g. the corporate sector. In these other sectors, the question immediately comes to mind as to who are the partners in corruption? Are they aid agencies, multi-nationals, and how much of this corruption can be attributed to the official or politician receiving the bribe or favour, and how much of it is attributable to the agency which gives the bribe.
The latter are willing to do so because they have high stakes, e.g. in terms of oil or gas exploration, or a particular set of development policies. The bribes in the latter case can take the form of highly paid consultancy contracts or offering contracts to only those who would share your views. Without such deeper analysis, we are still very much in the dark as to how the public interest may be compromised, leave alone how to correct the situation.

The writer is Professor, Economics Department, University of Dhaka and Director (Research), Cirdap.