Increasing Accountability forBetter Governance: Evidence f id from Brazils Audit Lotteries il di i

ClaudioFerraz Claudio Ferraz PUCRio

ImpactandPolicyConference Impact and Policy Conference Bangkok2012

Accountability and information

Inwellfunctioningdemocracies,voters In well functioning democracies voters makepoliticiansaccountablefortheir performanceinoffice performance in office

Accountability and information

Inwellfunctioningdemocracies,voters In well functioning democracies voters makepoliticiansaccountablefortheir performanceinoffice performance in office B i Butinmanydevelopingcountries,voters d l i i onlyhaveimperfectinformation about politiciansactions li i i i

Accountability and information

Inwellfunctioningdemocracies,voters In well functioning democracies, voters makepoliticiansaccountablefortheir performanceinoffice But in many developing countries, voters Butinmanydevelopingcountries,voters haveimperfectinformation about politiciansactions Low levels of schooling and lack of Lowlevelsofschooling andlackof governmenttransparency

Can improved information affect ? governance?

Can improved information affect ? governance?

Doesauditing andprovidinginformation aboutgovernment sperformancehelp about governments performance help citizensinsanctioningbadpoliticiansand selectingbetterleaders? selecting better leaders?

Can improved information affect ? governance?

Doesauditing andprovidinginformation aboutgovernment sperformancehelp about governments performance help citizensinsanctioningbadpoliticiansand selectingbetterleaders? selecting better leaders?
Shortterm=>elections Longterm=>judicialsystem,entryintopolitics

Can improved information affect ? governance?

Doesauditing andprovidinginformation aboutgovernment sperformancehelp about governments performance help citizensinsanctioningbadpoliticiansand selectingbetterleaders?
Shortterm=>elections Longterm=>judicialsystem,entryintopolitics

Dobetterleadersselectbetterpolicies?

Can improved information affect ? governance?

Doesauditingandprovidinginformation aboutgovernment sperformancehelp about governments performance help citizensinsanctioningbadpoliticiansand selectingbetterleaders?
Shortterm=>elections Longterm=>judicialsystem,entryintopolitics

Dobetterleadersselectbetterpolicies?

Exposing corrupt practices

Auditinglocalgovernmentsfortheuseof p publicresourcesanddisseminateinformation aboutcorruption Howdoestheinformationaboutcorrupt practicesaffectvotingpatterns? Howdoestheeffectofexposingcorruption practicesvarywiththeavailabilityoflocal i ih h il bili fl l media?

Difficulties inevaluating the effects of i f i information

Municipalitieswithmoremediacoverage,more educatedvoters,andmorepoliticalcompetition , p p willuncovermorecorruptpracticesandwillhave greaterlevelsofaccountability

Difficulties inevaluating the effects of i f i information

Municipalitieswithmoremediacoverage,more educatedvoters,andmorepoliticalcompetition , p p willuncovermorecorruptpracticesandwillhave greaterlevelsofaccountability Howcanweisolatetheaffectsofinformation disseminationtovoters?

Difficulties inevaluating the effects of i f i information

Municipalitieswithmoremediacoverage,more educatedvoters,andmorepoliticalcompetition , p p willuncovermorecorruptpracticesandwillhave greaterlevelsofaccountability Howcanweisolatetheaffectsofinformation disseminationtovoters? Randomlyselect municipalitiestobeauditedandhavethe summaryofauditreportsreleasedbeforethe f dit t l db f th election

Institutional background: i h locallevel inBrazil il corruption at the l l l l i

Brazilisoneofthemostdecentralized countriesintheworld countries in the world

Institutional background: i h locallevel inBrazil il corruption at the l l l l i

Brazilisoneofthemostdecentralized countriesintheworld countries in the world Municipalgovernmentsareresponsiblefor education,health,sanitation,andurban infrastructure

Institutional background: i h locallevel inBrazil il corruption at the l l l l i

Brazilisoneofthemostdecentralized countriesintheworld countries in the world Municipal governments are responsible for Municipalgovernmentsareresponsiblefor education,health,sanitation,andurban infrastructure Corruption at the local level is an Corruptionatthelocallevelisan overreachingconcern

Institutional background: l f i ineducation i examples of corruption i d

Municipalityclaimstohavepaidforbooks,but thebookswereneverreceivedbyschools Paymentsforschoolreforms,butnoreforms weremade. were made School lunches not provided but paid for Schoollunchesnotprovided,butpaidfor. g Diversionofresourcesthatshouldhavegone topayteachersalaries.

Where doesthe money forschool b ? buses go?

Institutional background: i f i pervasive consequences of corruption

Portuguese Port g ese
Standardize test scores ed -1.5 -1 -.5 0 .5 ed Standardize test scores -1.5 -1 -.5 0 .5

Math

0 .2 .4 .6 Proportion of items with corruption

0 .2 .4 .6 Proportion of items with corruption

Portuguese
Sta andardized test scores -1. .5 -1 -.5 0 .5 Sta andardized test scores -1. .5 -1 -.5 0 .5

Math

0 .1 .2 .3 .4 0 .1 .2 .3 .4 Share of audited resources with corruption Share of audited resources with corruption

Brazils anticorruption program Brazil s anti corruption

Monitoring through public lotteries started in in 2003.Program randomly selects municipalities to be audited forthe useof public resources p

Brazils anticorruption program Brazil s anti corruption

Monitoring through public lotteries started in in 2003.Program randomly selects municipalities to be audited forthe useof public resources p Objectives Disencourage the mismanagement of public funds Fosterthe participation of civilsociety in controlling the use of public resources useof

Brazils anticorruption program: execution Brazil s anti corruption program:execution

Lottery selects 50to60municipalities every 2 50 to 60 municipalities 2 mesestobe audited (among all municipalities with less than 450,000people,approximately , p p , pp y 5000localities)

Brazils anticorruption program: execution Brazil s anti corruption program:execution

Lottery selects 50to60municipalities every 2 50 to 60 municipalities 2 mesestobe audited (among all municipalities with less than 450,000people,approximately , p p , pp y 5000localities) 1020auditorsaresenttoexaminetheuseof federalfunds.Pre determinedsampleofpublic federal funds. Predetermined sample of public worksandprogramstoaudit.Lookatpaperwork ( g p (eg.procurementprocedures)and p ) implementation

Brazils anticorruption program: execution Brazil s anti corruption program:execution

Afteraweekofinspections,adetailedreport After a week of inspections a detailed report describingallirregularitiesfoundissubmittedto centralgovernment g

Brazils anticorruption program: execution Brazil s anti corruption program:execution

Afteraweekofinspections,adetailedreport After a week of inspections a detailed report describingallirregularitiesfoundissubmittedto centralgovernment g A summary of the findings is posted on the Asummaryofthefindingsispostedonthe internetanddisclosedtothemassmedia.

Presidncia da Repblica/tica

Programa de Fiscalizao a partir de Sorteios Pblicos Sem abrir mo de sua ao correcional, que consiste na apurao de denncias ou indcios de prticas lesivas ao interesse pblico, a Controladoria-Geral da Unio trabalha, agora, com um novo instrumento de fiscalizao, nunca antes utilizado na Repblica, visando dissuaso da corrupo entre gestores de todas as esferas da administrao pblica. Leia mais >>
s

Municpios sorteados Snteses dos relatrios de fiscalizao Notcias relacionadas 15/04/2005 - Muitas irregularidades no 13 sorteio 15/04/2005 - Indcios de fraude persistem em So Francisco do Conde 14/04/2005 - 15 Sorteio Pblico - Municpios sorteados 22/02/2005 - Ji-Paran/RO: CGU constata irregularidades em obra de R$ 7,2 milhes 22/02/2005 - Operadoras no cumprem metas de telefonia 12/01/2005 - Irregularidades em licitaes so os casos mais graves em municpios Notcias anteriores 2004

Lottery for auditing municipalities forauditing

Randomized information dissemination

Policy treatment

Treatment
Dissemination of audit ofaudit results before the election

Control
Dissemination of audit ofaudit results after the election

Measuring corruption
Basedontheauditreports,wedefinecorruptionas Based on the audit reports, we define corruption as anyirregularityassociatedwith:
Fraudinprocurement Diversionofpublicresources Overinvoicing

Measureofcorruption:numberofirregularities associatedwithcorruptioninamunicipality.

Main results
Theauditpolicy,andthereleaseofinformationprior The audit policy, and the release of information prior totheelection,decreasedtheshareofvotesandthe probabilityofreelectionforcorruptincumbent mayorsrunningforreelection.

Main results
Theauditpolicy,andthereleaseofinformationprior The audit policy, and the release of information prior totheelection,decreasedtheshareofvotesandthe probabilityofreelectionforcorruptincumbent mayorsrunningforreelection. Thereductioninreelectionratesforcorruptmayors waslargerinmunicipalitieswiththeexistenceof localradiotodisseminatetheresultsoftheaudits. l l d d h l f h d

Main results
Theauditpolicy,andthereleaseofinformationprior The audit policy, and the release of information prior totheelection,decreasedtheshareofvotesandthe probabilityofreelectionforcorruptincumbent mayorsrunningforreelection. Thereductioninreelectionratesforcorruptmayors waslargerinmunicipalitieswiththeexistenceof localradiotodisseminatetheresultsoftheaudits. l l d d h l f h d Noncorruptmayorsbenefittedfromhavingfoundto beclean

The effects of the audits by corruption Theeffectsoftheauditsbycorruption

.6 .2 0 Reelection rat tes .3 .4 .5

2 Number of Corrupt Violations

4+

Pos telect ion Au dit

Preelection Audit

The effects by corruption and media Theeffectsbycorruptionandmedia

.8 0 0 Re eelection rates .2 .4 .6

2 Numbe r o f corru p t vio la tion s

4+

Pre e le ctio n Aud it - No R a d io Po stelection Au dit - No Radio

Pre e le cti o n Au d it - R a d io Pos te lect io n Au dit - R adio

The effects by corruption and media Theeffectsbycorruptionandmedia

.8 0 0 R Reelection ra ates .2 .4 .6

2 Nu mb e r o f co rru p t vio la tio n s

4+

Pre le ti P e l ctio n A d it - N R a d i Au No io Po ste le ctio n Au d it - No R a d io

Pre l ti P e le cti o n A d it - R a d i Au io Pos te le ct io n Au d it - R a d io

Policy lessons
Voterscareaboutcorruptionbutmaynothavethe Voters care about corruption but may not have the informationnecessarytotakeaction. Inresponsetocredibleinformation,votersupdate theirbeliefsaboutpoliticiansandchangetheirvoting p g g behavior. Localmediacanenhancepoliticalaccountabilityand candidateselection.

Policy lessons
Randomauditsanddisseminationservetwo Random audits and dissemination serve two purposes:
Discourage corruption and Discouragecorruptionand Enhancecivilsocietyparticipation

Forlongtermeffectsonreducingcorruptionand improvingpolicies,needtopreventcorrupt improving policies, need to prevent corrupt politiciansfromreturningtopoliticsandpunish corruptioninthecourts(roleofjudiciary) p ( j y)

Future work Futurework

Arebad politicians substituted by good politicians in Are bad in the longrun or corrupt politicians return tooffice? Dobetter politicians implement better policies? Doesthe probability of beign audited change public sectormanagementpractices? g p What about local level bureaucrats, can we train and locallevel bureaucrats,can incetivize them toreduce mismanagement?