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International Monetary Fund. Fiscal Affairs Dept. and International Monetary Fund. Legal Dept.

institutions for their private benefit. . . . and undermine the recovery of debts or enforcement of claims . Corruption can be a major factor weakening the enforcement of claims and the recovery of debts. It negatively affects payment culture and increases market distrust, reducing access to credit and increasing transaction costs. Poorly functioning government institutions affect the drivers of potential and inclusive growth by . . . . . . increasing the cost and lowering the quality of public investment . Corruption can distort the selection of public investment

International Monetary Fund. Fiscal Affairs Dept. and International Monetary Fund. Legal Dept.
In an environment in which growth and employment prospects in many countries remain subdued and a number of high-profile corruption cases have fueled moral outrage, and amid a growing consensus that corruption can seriously undermine a country’s ability to deliver inclusive economic growth in a number of different areas, addressing corruption globally—in both developed and developing countries—has become increasingly urgent. When corruption impairs government functions, it can adversely affect a number of important determinants of economic performance, including macrofinancial stability, investment, human capital accumulation, and total factor productivity. Moreover, when systemic corruption affects virtually all state functions, distrust of government can become so pervasive that it can lead to violence, civil strife, and conflict, with devastating social and economic implications. This Staff Discussion Note focuses on corruption that arises from the abuse of public office for private gain, whether it manifests itself transactionally (for example, a bribe) or through powerful networks between business and government that effectively result in the privatization of public policy. While designing and implementing an anticorruption strategy requires change on many different levels, the IMF's experience in assisting member countries suggests that several elements need to be given priority: transparency, rule of law, and economic reform policies designed to eliminate excessive regulation. Perhaps most important, however, addressing corruption requires building effective institutions, with the clear objective of developing a competent civil service that takes pride in being independent of both private influence and public interference.
International Monetary Fund. Fiscal Affairs Dept. and International Monetary Fund. Legal Dept.
International Monetary Fund

transparency questionnaire, and other sources of information. The IMF Manual on Fiscal Transparency (2007) ( http://0-www-imf-org.library.svsu.edu/external/np/fad/trans/manual/ ) should be consulted for further explanation of the terms and concepts discussed in this report. The Norwegian fiscal management system is characterized by a high level of transparency, especially in the area of resource revenue where Norway is a leader. Norway’s public management system operates in a highly decentralized fashion and demands a high degree of integrity and well-functioning government institutions

International Monetary Fund

policy variables are the most important factors in promoting or restraining growth. Particularly important are openness to trade, high national saving rates, and smoothly functioning government institutions. Geographical location, natural-resource endowments and demographic patterns also emerge as important factors in economic growth. The surveys show that the business community in much of Africa concurs with the importance of government policy. Foreign-owned firms listed political and policy stability as the most important factors affecting where they invest and as

Mr. Allan D. Brunner

, adequate financial markets, functioning government institutions – are not available. It also suggests a contingent or nonlinear relationship between income and trade, which could help explain the non-robustness seen in linear models. Finally, Fischer (1993) argued that most econometric studies use ad hoc, reduced-form specifications, making it impossible to understand the channels of causation of trade on income. He advocated a production function approach and found that trade liberalization’s positive effects are largely associated with productivity gains. 5 There

Mr. Allan D. Brunner
This paper examines the dynamic relationship between trade and income. While most economists agree that increased trade leads to an increase in average income, economic theory is ambiguous about the possible effects on the long-run growth rate of the economy. Using a dynamic panel data model, the hypotheses of no long-run effects of trade on income and on income growth are tested explicitly. The possibility of endogeneity is addressed by constructing an instrument for trade by extending Frankel and Romer's (1999) cross-sectional approach to the case of a panel data model. The empirical results indicate that trade has a large and significant effect on the level of income, but the effect on income growth is small and non-robust to model specification.
Mr. Carlos A Leite and Jens Weidmann
This paper argues that natural resource abundance creates opportunities for rent-seeking behavior and is an important factor in determining a country’s level of corruption. In a simple growth model, we illustrate the interrelationships between natural resources, corruption, and economic growth, and discuss potential anti-corruption policies. We show that the extent of corruption depends on natural resource abundance, government policies, and the concentration of bureaucratic power. Furthermore, the growth effects of natural resource discoveries and anticorruption policies crucially depend on the economy’s state of development. We empirically corroborate the model’s implications in a cross-country framework with both corruption and growth endogenized.
International Monetary Fund. Legal Dept. and International Monetary Fund. Fiscal Affairs Dept.

of whom are not legally authorized to handle public funds. Although standardized, public financial management procedures in the public sector are not followed . The following steps, critical in the execution of expenditure, have worrying weaknesses: a) Public procurement. The effectiveness of the legal framework and of the institutions overseeing public procurement is marginal. In 2018, only 14 percent of public contracts were awarded in the form of a competitive tender. This would be mainly due to the fragmentation of the State functions (government

International Monetary Fund. Legal Dept. and International Monetary Fund. Fiscal Affairs Dept.
At the request of His Excellency the President of the Republic and Head of State, the Legal (LEG) and Fiscal Affairs (FAD) Departments of the IMF conducted an assessment of governance and corruption mission in Kinshasa, Democratic Republic of the Congo (DRC) from December 9 to 20, 2019 (the “mission”).1 The objectives of the mission were to discuss with the authorities (i) a diagnostic of governance issues in the DRC; and (ii) to articulate measures to help improve governance and the fight against corruption.