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The World Bank funds a program run by the Indonesian government called the Kecamatan Development Project (KDP), which supports approximately 15,000 projects such as resurfacing existing dirt roads, in various Indonesian villages annually. In order to receive funds, each village must submit a project proposal to the KDP. In September 2003, 608 of these villages were about to begin constructing their village road according to their proposals. 14 These villages became the setting for Olsen’s experiment that was designed to measure the difference in levels of corruption associated with government audits versus grassroots participation through local-level community monitoring. In order to gauge the effects of external monitoring through government audits, randomly selected villages were told that their project was going to be audited by the central government agency. While the locals knew that their usual chance of being audited was very low (four percent), this increased the probability to onehundred percent. With this came the increased possibility of legal and social repercussions against those engaging in corruption. A far graver possibility was the tradition that when auditors came to the town, the results of the audit would be read aloud at a public village meeting. For any official found corrupt, this would incur severe social sanctions compounded by the shameful punishment of publically returning the stolen funds.
14 Olken, Benjamin A. 2007. “Monitoring Corruption: Evidence from a Field Experiment in Indonesia.” Journal of Political Economy 115: 200-249.
Journal of Political Inquiry 2 (2009) The remaining villages were selected to show the effect of grassroots community monitoring on corruption. Even though the village accountability meetings were open to the public, members of the community generally did not attend without a personal invitation. For the purpose of the experiment, hundreds of invitations to the meeting were distributed in each village, and villagers were encouraged to bring attention to any notable discrepancies they had witnessed in the road-building projects. In some villages, comment forms were distributed along with the invitations that could be filled out and placed into a sealed drop box before each meeting. This ensured that the villagers could use their anonymity to protect themselves from any retaliation. Olken also tested for the role of free riders and capture by the elite through the various ways that invitations were distributed. In some cases, invitations were given to village leaders to hand out to their members. The other half of the villages received invitations through their children who were given the papers to bring home from school, subsequently eliminating the possibility of powerful leaders only inviting community members whose ideals were aligned with their own.
Corruption in these projects occurred in two forms. In the first form, suppliers for the village projects would either raise the prices or the quantity listed for them on official reports, then splitting the excess money between the village head and project officials. In the second form, project and village officials took advantage of villagers’ willingness to work on public projects for free or at least for an extremely reduced wage as a result of their natural desire to improve their own community. Project and village officials would then simply account for what would be standard labor wages on their reports when the workers had actually volunteered their time and efforts, placing these funds in their pockets.
According to the data analysis, the percent missing in the road project conducted under audit was 8.5 percent less than the control group (a p-value of 0.058), and the percent missing from the road and ancillary projects was reduced by 9.1 percent (a p-value of 0.034). This brings the average reduction to about eight percentage points, which is a fairly significant sum when compared to the total of 27.7 percent of unaccounted funds in control groups.
Before it can be determined whether the grassroots approach was successful in curbing the road project corruption, it must first be assessed whether it even achieved its goal in increasing participation. According to Olken’s equations, the group given invitations led to a 14.8 person, or 40 percent increase in attendance per meeting. However, the group given comment forms only exhibited a slight increase in attendance, suggesting that community members felt that submitting their comments served as a substitute for being present at the meeting. Yet, the most drastic of all improvements were that of non-elite members present at the meetings, which increased by seventy-five percent. In villages where attendance increased, if attendees were given the anonymous comment forms, the volume of actions taken against corruption was seventy percent higher than in control villages. However, despite the increase in action when compared to control groups without comment forms, there were still relatively few issues of corruption actually addressed in either setting, thus Journal of Political Inquiry 2 (2009) showing the minimal and ineffective nature of community participation in monitoring corruption.
II.2. Fighting Corruption to Improve Schooling: Evidence from Reinikka and Svensson’s Newspaper Campaign in Uganda Reinikka and Svensson argue that the improvement of government social services is essential to meeting the Millennium Development Goal of having universal primary school enrollment by 2015. As these forms of governance are improved, it is proposed that this could in turn be the most cost-effective way to increase school enrollment and improve the overall potential for student learning.
As such, Reinikka and Svensson argue that finding improved methods for accountability should be at the forefront of experimentation and evaluation.
This idea is manifested in a Ugandan policy experiment in which a newspaper campaigned towards reducing the capacity for capturing funds by making the details of how local officials were handling the education grants available to the public. This type of program had worked well in other developing countries, according to budget data provided by the central government. The World Bank took initiative towards displaying accountability by carrying out a benefit incident analysis that helped determine that their distributions of public spending were neutral. Neither of these sources of information however was able to accurately portray what was actually happening in the country on the ground level.
In the mid-1990s, a public expenditure tracking survey revealed that the average school was receiving a mere twenty percent of the funds allotted to them by the central government spending program. In fact, the majority of schools were not receiving anything at all, and the predominant portion of grants were left in the pockets of local government officials who had been charged with distributing them among the schools. While the benefit incidence analysis indicated no bias towards regions or economic differences, the information produced on the amount of actual public spending that was given to the schools demonstrated that poorer areas were at a far greater risk of having their funds captured than those in wealthier communities.
Mindful of this evidence, the Ugandan government moved to launch a newspaper campaign that would attempt a completely different approach to eliminating corruption. Typically, anti-corruption policy involves the monitoring of illegal activity by members of the legal or financial branches of government. As Reinikka and Svensson point out, the irony with this type of approach in many developing countries is that these are often the very areas of society that are the most corrupt. Mindful of this, the government instead placed their faith in the bottom-up approach relying on citizens as the key enforcers. In order to facilitate the citizens’ adequate monitoring of funds, grants transferred to school districts each month were made public knowledge via local newspapers.
Since the newspaper campaign began, schools that were more exposed to the campaign had seen a significant decrease in captured funds. It is suggested that 44.2 percent more of the funds reached the schools as a result of Journal of Political Inquiry 2 (2009) the campaign. Moreover, once community members became aware of the movement towards greater accountability, schools also saw a significant increase in enrollment. For every additional newspaper a community had, the number of students enrolled in grade seven alone increased by twenty individuals. However, it must be acknowledged that this could also have been the result of a combination of increased public awareness caused by the newspaper campaign.
Another contributing factor could have been the fact that 1997 marked the end of primary schools’ ability to charge school fees.
Other evidence that would suggest that monitoring the activities of government officials was an effective means of reducing corruption in school systems can be seen through increased enrollment. Newspapers affect school enrollment because of the information they convey to the public about national grants. This study found that for every additional newspaper a community had, the number of students enrolled in grade seven alone increased by twenty individuals.15
II.3. Critique and Alternative Solution
Although both papers present evidence of efforts made towards minimizing corruption, the current conditions in northern Uganda renders the success of these options unlikely. The success of the top-down approach in Uganda is limited as the central government’s inefficiency and ethnic bias is the enabling force behind the continuing depravation of citizens in camps. Although Olken describes a setting in which simply letting the local officials know that they would be monitored is enough to seriously curb the corruption taking place, it cannot be assumed that the same principle of fear of shame could be applied in the case of misallocating foreign aid in northern Uganda. High-level government officials who redirect aid to their constituencies are in a very different position than local-level village officials who are tempted to line their pockets with extra funds from a road-building project. As seen in McMillan and Zoido’s “How to Subvert Democracy: Montesinos in Peru,” it is unfortunately not a rare or difficult task to bribe those in positions of power to comply with the wishes of those in leadership.16 At the same time, however, the community members receiving the aid cannot be expected to use their collective voice to monitor the misappropriation of funds through the bottom-up approach. While the community members described by Reinikka and Svensson were given knowledge of their rights and the freedom to respond, the 1.7 million refugees in Northern Uganda have been granted no such freedom. When the LRA raided Acholi villages in northern Uganda, the Ugandan government told the Acholi people that they had seventyReinikka, Ritva, and Jakob Svensson. 2005. “Fighting Corruption to Improve Schooling: Evidence from a Newspaper Campaign in Uganda.” Journal of the European Economic Association 3: 259-267.
McMillan, John and Pablo Zoido. (2004, April). "How to Subvert Democracy:
Montesinos in Peru," CESifo Working Paper Series No. 1173.
Journal of Political Inquiry 2 (2009) two hours to leave their homes and secure a place within a displacement camp.
Anyone found outside of the boundaries of camp after that point would be assumed to be a rebel and would be shot on sight. From that point on, these citizens lost the freedom and authority which would leave room to be compared to those who benefited from the newspaper campaign. They were not given a choice to stay in their homes, a vote, or even freedom to roam beyond designated boundaries. As such, it cannot be suggested that any form of grassroots bottom-up monitoring is an efficient tactic to correct the misappropriation of funds. Although peace talks are under way and some Acholis have returned, they remain at the mercy of the officials chosen to disperse aid. Consequently, there is a need for an objective actor with the resources and power to ensure that funds are not distributed based on ethnic biases and past political ties.
There is a growing international force in a strong position to solve this dilemma -- non-governmental organizations (NGOs). Worldwide, donors entrust these organizations with huge investments in nearly every corner of the globe with high expectations that their vision of potential impact will be realized. In 2004, the nations of the world gave approximately $78.6 billion in international aid. NGOs were the recipient of the upwards of forty-five percent of this sum.
When closely examining the similarities between the dominant humanitarian organizations, two main explanations for this growing trend to rely on NGOs to effectively distribute aid come to light.
The first theory as to why NGOs are preferable over the central government as aid beneficiaries is that NGOs, by their institutional nature, are more transparent. While most officials in developing countries are still granted a great deal of freedom of spending due to their national sovereignty, NGO officials are required to maintain complete transparency in order to sustain support.
Much like the Ugandan government, which receives half of its national budget from Western donors, NGOs also heavily rely on the generosity of these same donor governments. However, there seems to be far more pressure on humanitarian organizations to show exactly where these funds are directed. In order for NGOs to continue to gather support, they must be able to prove that at least ninety percent of all the funds they collect go directly to their cause. This means that no more than ten percent can be allocated to administrative needs.
Many prominent NGOs, such as CARE International, World Vision, and Doctors Without Borders (MSF), provide annual reports to donors as well as the public (via websites) that outline the origins of the funds and how they were spent. Such practices create greater transparency and encourage other NGOs to become transparent as well.
Not only do NGOs exhibit greater transparency, but they are also held to a more critical standard of effective use of the resources with which they have been entrusted. Recipients of aid hold NGOs accountable through downward accountability while donor states, international humanitarian law, host governments, and even the organization’s charter exert upward accountability.