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430 Health and education consume a significant fraction, usually half or more, of central government expenditures in low- and middle-income countries . Along with infrastructure, these two sectors dominate the activities of most national governments and, if public subsidies are effective and well targeted , are key investments to improve the capabilities and quality of life of the poor. Foreign assistance is concentrated in health and education, although it is typically not well coordinated either across donors or with domestic government spending, and many different channels and systems are used for disbursing the funds. A principal argument that donors use to defend why they do not put their assistance through government budgets in a coordinated fashion is inadequate fiduciary controls, inability to trace funds, and blatant corruption. There is a significant literature on corruption in the health sector and a developing literature on corruption in the education sector. However, there is little systematic evidence of corruption in either sector. Nor has there been an effort to tease out characteristics of the two sectors that would help us to understand similarities and differences in interventions that might reduce opportunities and incentives for corruption. This chapter focuses on economic characteristics of the two sectors and operational opportunities for governments and donors to improve the design of their interventions so as to reduce vulnerability to corruption and its negative impact on poor parents’ abilities to invest in their children. In health, the typical diagnosis of corruption lists all of the possible areas where corruption might occur, but because so little is known empirically about it, it is nearly impossible to sort out what matters the most. Hence, recommendations for managing corruption tend to be reduced to enforcing 17 Reducing Corruption in the Health and Education Sectors charles c. griffin 17 0328-0 ch17.qxd 7/15/09 3:53 PM Page 430 laws, increasing community oversight, improving the pay and accountability of staff, making procurement more rule-bound and transparent, and so on. These are general types of guidance that probably would improve the situation in any sector, but they also tend to require major reforms across the board, while impact is uncertain and untested.1 In education, more or less, the same recommendations are made, although because education also has a certification role, there are additional corruption issues and actions related to testing and accreditation.2 Where to Look: Expenditures in Health and Education The possible sources of corruption lie in the elements of the delivery of services with public sector financing. Of course, there are also instances of corruption within the private sector, but the focus of this discussion is on the use of public funds. Table 17-1 is not exhaustive but provides examples of sources of corruption in health and education and attempts to distinguish between corruption and performance failures. In terms of labor force issues, health and education services tend to be labor intensive, particularly at the primary level (in health, that would be clinic or physician services; in education, this refers to primary schools). In poorer countries, it is almost an understatement to say that these services are labor intensive, as labor costs tend to crowd out virtually all other public expenditures. Table 17-2 shows the high share of primary school budgets devoted to teacher salaries and allowances in eleven African countries. The most important corruption issue for the labor force that has been quantified is a failure to show up for work. The most widely cited estimates come from background work for the World Development Report 2004, shown in Table 17-3. The numbers in the table are thought to be conservative estimates . Teachers, for example, were counted as absent only if they were fulltime employees and were not present in the school during a period when they should have been teaching a class. For health workers, only those who were supposed to be present in that particular facility at the time of the visit, as reported by the facility manager, were counted if they were absent. Illness and other duties were the most commonly stated causes for absences, but these accounted for less than 3 percent of absences across the sample. In other words, excused absences could reduce the unweighted averages for all absences by only about three points. The extent to which salary costs crowd out other expenditures is enormous . In 2006, in Latin America the average for salary costs in education was Reducing Corruption in the Health and Education Sectors 431 17 0328...


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