Israel Economics

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Israel first in Middle East in battling corruption

By TheMarker and Reuters

Israel and the United Arab Emirates lead Middle Eastern countries in the fight against corruption and enacting laws that benefit business, according to a World Bank report.

The study, released Tuesday, measures factors such as controlling corruption, government accountability, political stability, press freedom and the absence of violence.

However, the bank's latest Worldwide Governance Indicators study of 212 countries from 1996 through 2006 shows little overall improvement in governance worldwide despite the increasing focus on the issue.

On all the measures except for political stability Israel received high marks, though still significantly lower than other developed countries.

In corruption control, Israel had a 79.6 percent score. This ranks below a fifth of the countries rated. High-scoring nations were Australia, 95.1 percent, Canada, 94.2 percent, Germany, 93.2 percent, France, 91.7 percent, and the U.S., 89.3 percent. In 2005 Israel received a 75 percent score on corruption control.

On the good governance scale, Israel received a reasonable score, 70 percent, which put it far ahead of its neighbors such as Syria, 36.2 percent, or Iran, 23.3 percent. However, the Emirates scored 69 percent, and Israel was again far behind Western nations such as Belgium, 91 percent, Germany, 94.3 percent, and the U.S., 91.9 percent. In 2005 Israel actually scored higher, 74 percent.

Israel's worst ranking came in political stability, 14.4 percent, which was also down from 19 percent in 2005. Israel thus ranks among African regimes such as Kenya, 15.4 percent, and Liberia, 12.5 percent.

In 2005 the World Bank considered Israel one of the riskiest countries in the Western world, with an unstable, inefficient and irresponsible government, and with a high level of corruption compared with developed countries.

The World Bank cautions against reading too much into global averages, and also reveals that some governments, including those in Africa, could make a difference relatively quickly when undertaking reforms.

These countries could expect a three-fold increase in per-capita income in the long term, the bank estimated.

"Until the mid-nineties, I did not think that governance could be measured. The Worldwide Governance Indicators have shown me otherwise," says Shlomo Yitzhaki, director of the Central Bureau of Statistics (CBS) and an economics professor at Hebrew University.

"It constitutes the state of the art on how to build periodic governance indicators that can be a crucial tool for policy analysts and decision-makers benchmarking their countries," he said.

"Uniquely, it publicly discloses the aggregated and disaggregated data, as well as the estimated margins of error for each country. It definitely sets a standard for transparency in data."

According to Daniel Kaufmann, an author of the report and director of global programs at the World Bank Institute: On average we do not find evidence around the world that governance has improved significantly. Whether it is rule of law or control of corruption, on average there is no compelling evidence.

In June, Kaufmann warned that even though Israel is considered one of the 50 leading nations in fighting corruption, in recent years there has been a deterioration in this area. He added that among industrialized nations, Israel was in the bottom five in every parameter related to good governance.

"The good news is this is just an average and hides enormous variation from one country to the other, and there are a large number of countries that are showing that in eight to 10 years, it is possible to significantly improve governance," Kaufmann said.

For example, between 1998 and 2006, there were improvements in democratic accountability in Sierra Leone and Niger, while the rule of law improved in Algeria, Liberia and Tajikistan.

Serbia and Tanzania were examples of countries that were able to better control corruption, the report said.

Still, the indicators also showed that governance deteriorated in Venezuela, Ivory Coast and Zimbabwe.

Meanwhile, Somalia, Myanmar, Equatorial Guinea, Haiti and Zimbabwe ranked lowest in terms of being able to control corruption.

Nordic countries such as Finland, Iceland, Denmark and Norway, as well as New Zealand, received the highest overall governance scores.

The latest indicators are based on hundreds of variables and views of thousands of individual and firms in surveys. They measure governance within the governments of the World Bank's member countries and have put the bank at odds against some governments, like China, which question whether the bank should be involved in rating countries on governance. The indicators show that China ranks in the bottom decile on voice and democratic accountability. Despite its governance shortcomings, the Asian giant has been able to attract vast foreign investment and enjoys fast-paced growth.

Elsewhere, Chile, Botswana, Costa Rica, Uruguay and Estonia are among more than a dozen developing countries that beat industrialized nations such as Greece or Italy on the governance scale.

"It is achievable to have high levels of governance while still being an emerging economy, which is a precursor of sustained growth," Kaufmann added.Being part of the industrialized world did not mean countries escaped governance challenges. "Not so," he said. "The countries that set the standards for governance include the Nordic countries, New Zealand and a few others, but by no means all the countries in the G7 are necessarily at the top," he added.

http://www.haaretz.com/hasen/spages/880994.html