Wednesday, December 22, 2010

The cost of corruption in developing countries

Developing countries lose between $20 billion and $40 billion each year to bribery, embezzlement, and other corrupt practices. Over the past 15 years only $5 billion has been recovered and returned.

More on the Asset Recovery Handbook 2010

Getting investment in infrastructure right

Investment in infrastructure can raise productivity, boost growth, and help reduce poverty. And, lack of infrastructure has been one of the most binding constraints on growth in the developing countries. They need massive investments in infrastructure to connect markets, facilitate trade, reduce transaction and transportation costs, and to facilitate movement of goods and services, among others. But, how to get investment in infrastructure right? Here is brief piece on how to do that.

  • Stronger framework for public sector investment decisions (develop a coherent strategy for scaling up infrastructure that directly spur growth; follow through on the investment strategies—strong institutional framework, adequate budget and good governance; seek ideas on how to finance the scaling up—strong revenue base, borrowing to finance investment and not consumption, and debt within payable limits)
  • Support for capacity building (seek multilateral agencies’ help in making budgets consistent with infrastructure plans, learn from China’s experiences in infrastructure investment)
  • A bigger role for the private sector (private sector investment can work in energy and telecom sectors, incentivize the private sector by offering good tax system, governance and a sound legal framework)