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Controlling corruption: Auditing versus community participation

What is the best way to control and measure corruption? This paper outlines a method devised by the author which measures corruption and uses it to evaluate alternative strategies to reduce corruption on an Indonesian road-building project. Two types of strategies were tried: encouraging community participation and increasing the probability of audits. The projects tested were Indonesian government programs supported by a loan from the World Bank, the Kecamatan Development Program (KDP) which funds projects in about 15,000 villages each year. Each village receives an average of $8,800, which they often use to surface existing dirt roads. The paper shows how checks on corruption are built into KDP. First, funds are paid to village &lsquo;implementation teams&rsquo; in three installments. To receive the second and third payments, the teams must make accountability reports at an open village meeting. Second, each project has a 4 percent chance of being audited by an independent government agency. This study introduced two anti-corruption strategies: enhancing community participation and increasing government audits. The paper finds that because corruption can be widely embedded in a society, it is difficult to study anticorruption measures using traditional techniques. The author concludes however that increased grassroots participation was not the solution. Additional findings include: <ul class='square_dot_ul'> <li>traditional government audits cost-effectively decreased &ldquo;missing expenditures&rdquo; by 8 percentage points;</li> <li>on average, community monitoring did not reduce corruption;</li> <li>corruption can be measured as &ldquo;missing expenditures;</li> <li>measuring corruption using perceptions can potentially be misleading.</li> </ul>

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    Abdul Latif Jameel Poverty Action Lab. Policy Briefcase No 5, March 2008: </span>http://www.povertyactionlab.org/papers/Briefcase05.pdf