Economic Information Empowering Change

World Bank InstituteWorld Bank InstituteD. Kaufmann & M. Nelson D. Kaufmann & M. Nelson

with R. MacDonell, R. Stapenhurst, and T. Carringtonwith R. MacDonell, R. Stapenhurst, and T. Carrington

Presentation of the WDR ’01

Consultative Meeting on Role of Media:

Access to Business and Economic Information April 12, 2001April 12, 2001

http://www.worldbank.org/wbi/governance

Media and the Economy ““There has never been a famine in any country There has never been a famine in any country

that has been a democracy with a relatively free that has been a democracy with a relatively free press. . . I know of no exception.”press. . . I know of no exception.”

Amartya Sen

““It is now generally recognized that better, more It is now generally recognized that better, more timely, information results in better, more timely, information results in better, more efficient resource allocations.”efficient resource allocations.”

Joseph

Stiglitz ““If you cannot measure and disseminate If you cannot measure and disseminate itit, you , you

cannot change cannot change itit.”.”

Anonymous

0

10

20

30

40

50

60

70

80

90

Majority of population of developing countries do not enjoy free press

High income

Upper-middle

Lower-middle

Low income

Sources: Freedom House, M. Nelson’s Calculations

Problems of Media in Emerging Economies

Lack of legal protections for free speechLack of legal protections for free speech Repressive misuse of libel & insult lawsRepressive misuse of libel & insult laws Weak institutional capacity to respond to media Weak institutional capacity to respond to media

disclosuresdisclosures Weak management and corporate governance within Weak management and corporate governance within

media sectormedia sector Lack of independent finance: Dependence on Lack of independent finance: Dependence on

subsidies, state payments, “oligarchs”, rather than subsidies, state payments, “oligarchs”, rather than relying on readers and advertisingrelying on readers and advertising

Insufficient expertise on key subjects (economics, Insufficient expertise on key subjects (economics, business, environmental issues, governance)business, environmental issues, governance)

Broad Economic and Institutional Reform: hand-in-hand with Strengthening the Media

Economic growth spurs demand for informationEconomic growth spurs demand for information Providers of that information compete for new Providers of that information compete for new

audiences and advertisersaudiences and advertisers Media becomes more independent and begins to Media becomes more independent and begins to

play crucial role of monitoring public and private play crucial role of monitoring public and private sector behavior sector behavior

Advocate for institutional changeAdvocate for institutional change Demand for rigorous information/data, which Demand for rigorous information/data, which

empowersempowers

Case Study in Poland: Rzeczpospolita

Government sold stake in Party daily (1991)Government sold stake in Party daily (1991) Managers did management trainingManagers did management training Journalists studied economicsJournalists studied economics Beefed up economics/ business coverageBeefed up economics/ business coverage Advertising revenues soared, spurred by Advertising revenues soared, spurred by

strong demand for business pagestrong demand for business page Today newspaper is independent, profitableToday newspaper is independent, profitable

Towards Framework for Understanding the Media Environment: Data on Interference in the Media

1. Legal Structures: Laws and regulations that 1. Legal Structures: Laws and regulations that censor media contentcensor media content

2. Political Pressures: Controls on content 2. Political Pressures: Controls on content imposed by authorities, political parties, licensing imposed by authorities, political parties, licensing proceduresprocedures

3. Economic Measures: Bogus tax inspections, 3. Economic Measures: Bogus tax inspections, monopolies on newsprint and subsides to monopolies on newsprint and subsides to “obedient” media“obedient” media

Source the data: Freedom HouseSource the data: Freedom House WDR ‘01 also doing new work in this areaWDR ‘01 also doing new work in this area

1. Laws and Regulations that Influence Media Content (source: Freedom House)

Low interference Moderate High interference

Czech RepublicCzech Republic

EstoniaEstonia

HungaryHungary

LatviaLatvia

PolandPoland

RomaniaRomania

RussiaRussia

SloveniaSlovenia

AlbaniaAlbania

ArmeniaArmenia

BosniaBosnia

BulgariaBulgaria

GeorgiaGeorgia

MacedoniaMacedonia

SlovakiaSlovakia

UkraineUkraine

AzerbaijanAzerbaijan

BelarusBelarus

CroatiaCroatia

KazakhstanKazakhstan

TajikistanTajikistan

TurkeyTurkey

TurkmenistanTurkmenistan

UzbekistanUzbekistan

2. Economic Pressures on Media to Influence Content (source: Freedom House)

Low interference Moderate High interference

Czech RepublicCzech Republic

EstoniaEstonia

LatviaLatvia

LithuaniaLithuania

MacedoniaMacedonia

PolandPoland

SlovakiaSlovakia

AlbaniaAlbania

AzerbaijanAzerbaijan

BulgariaBulgaria

BosniaBosnia

GeorgiaGeorgia

HungaryHungary

Russia Russia

MacedoniaMacedonia

MoldovaMoldova

TajikistanTajikistan

TurkeyTurkey

Turkmenistan Turkmenistan

YugoslaviaYugoslavia

3. Political Pressures and Controls on Media Content (source: Freedom House)

Low interference Moderate High interference

BulgariaBulgaria

Czech RepublicCzech Republic

EstoniaEstonia

LatviaLatvia

LithuaniaLithuania

SlovakiaSlovakia

SloveniaSlovenia

BosniaBosnia

GeorgiaGeorgia

HungaryHungary

MacedoniaMacedonia

PolandPoland

RomaniaRomania

UkraineUkraine

AlbaniaAlbania

AzerbaijanAzerbaijan

BelarusBelarus

Kazakhstan Kazakhstan Russia Russia

TurkeyTurkey

TajikistanTajikistan

Afg

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173 Countries

No

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In

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Voice and Accountability

Source: "Governance Matters" by Daniel Kaufmann, Aart Kraay and Pablo Zoido-Lobaton, May 1999. http://w w w .imf.org/external/pubs/ft/fandd/2000/06/kauf.htm.

Note: Blue dots represent mean estimates for the governance indicator. The thin vertical lines represent standard errors around these estimates. To add or delete countries from the chart, click on the "Country Select" tab below .

HIGH

LOW

Illustration of Data Empowering: Worldwide Indicators

Finland0

20

40

60

80

100

120

140

160

180

200

-2 -1 0 1 2'Voice' (including freedom of the press), Civil

Liberties and Accountability

Infa

nt

Mo

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Voice and Transparent Information Matters for Developmental Outcomes (source: KKZ data from 170 countries)

Source: KKZ 1999

AGOALB

AREARG

ARM

AUSAUT

AZE

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BEN

BFABGDBGR

BHR

BHS

BIH

BLRBOL

BRABRN

BWA

CANCHE

CHL

CHNCIV

CMR

COGCOL

CRI

CUB

CYP

CZE

DEU

DNK

DOMDZA ECU

EGY

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHA

GIN

GMBGNB

GRC

GTM

GUY

HKG

HND

HRVHTI

HUN

IDN

IND

IRL

IRN

IRG

ISL

ISR

ITA

JAMJOR

JPN

KAZKENKGZ

KOR

KWT

LBN

LBRLBY

LKA

LSOLTU

LUX

LVA

MAR

MDA MDGMEX

MKD MLI

MLT

MMR

MNG

MOZ

MUS

MWI

MYSNAM

NER

NGANIC

NLD

NOR

NZL

OMN

PAK

PANPER PHL

PNG

POL

PRK

PRT

PRY

QAT

ROMRUSSAU

SDN

SEN

SGP

SLE

SLV

SOM

SURSVK

SVN

SWE

SWZ

SYRTCD

TGO THA

TJK TKM

TTO

TUN

TUR

TWN

TZA

UGA

UKR

URY

USA

UZBVEN

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YEMYUG

ZAF

ZAR

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r = 0.68

-2.5

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0 0.2 0.4 0.6 0.8 1

Control of Corruption and Freedom of the PressHigh

Low

Low High

Freedom of the Press (Freedom House)

Con

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of

Cor

rup

tion

[kk

z]

The ‘Dividend’ of Good Governance

Infant Mortality and Corruption

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Weak Average Good

Control of Corruption x Development Dividend

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2,000

4,000

6,000

8,000

10,000

12,000

Weak Average Good

Regulatory Burdenx Development Dividend

Per Capita Income and Regulatory Burden

Literacy and Rule of Law

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75

100

Weak Average Good

Rule of Law x Development Dividend

Per Capita Income and Voice and Accountability

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2000

3000

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5000

6000

7000

8000

9000

10000

Weak Average Strong

Voice and Accountabilityx DevelopmentDividend

Note: The bars depict the simple correlation between good governance and development outcomes. The line depicts thepredicted value when taking into account the causality effects (“Development Dividend”) from improved governance to betterdevelopment outcomes. For data and methodological details visit http://www.worldbank.org/wbi/governance.

0

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35

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45

50

Hungary Estonia Russia Azerbaijan

Parliamentary legislation

Decrees Central Bank Influence

Firms Reporting Negative Impact of High Level Corruption‘State Capture’ Source: WBES Survey 1999, 20 transition countries

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Adverse Impact of ‘Purchases’ of:

State Capture exists where incomplete Civil Liberties and slow Economic Reforms

0%

10%

20%

30%

40%

Ext

ent

of S

tate

C

aptu

re

High Civil Liberties Partial CivilLiberties

High Economic Reform

Partial Econ. Reform

Low Ec. Reform

Degree of Civil Liberties in Transition Economies

Degree of EconomicReforms

http://www.worldbank.org/wbi/governance

Very High State Capture

The Media within Institutional Reform Controlled media is at the heart of political power Controlled media is at the heart of political power

in many weak, unstable regimes in many weak, unstable regimes Media was also central to establishment of Media was also central to establishment of

oligarchy in post-Soviet statesoligarchy in post-Soviet states When free and competent, has huge cross-sectoral When free and competent, has huge cross-sectoral

and cross-institutional reachand cross-institutional reach Deregulation of media early in reform process has Deregulation of media early in reform process has

big impact (Poland)big impact (Poland) Must be coupled with other institutional reforms Must be coupled with other institutional reforms

(Russia) (Russia)

What Some Countries Do

Public sector reforms that stress public Public sector reforms that stress public access to records, documents, decisions access to records, documents, decisions

Eliminate “insult laws” aimed to protect Eliminate “insult laws” aimed to protect leaders; liberalize libel laws; strengthen free leaders; liberalize libel laws; strengthen free speech protectionsspeech protections

Privatize state media and detach Privatize state media and detach broadcasting regulators from political broadcasting regulators from political influenceinfluence

Role of IFI’s and Donors

Set an example by providing access to documents, Set an example by providing access to documents, decisions, people, data – internet power…decisions, people, data – internet power…

Emphasize Emphasize access access in public sector reformsin public sector reforms Encourage governments (central, regional, local) Encourage governments (central, regional, local)

to end subsidies to mediato end subsidies to media Involve media early in governance diagnostics, in Involve media early in governance diagnostics, in

good governance programs, CDF, PRSP and other good governance programs, CDF, PRSP and other consultative processesconsultative processes

Train media in management, specialized Train media in management, specialized journalistic fieldsjournalistic fields

A Learning Program Illustration: Regional Media Capacity Building in Russia/CIS

Based on needs assessment done 1999-2000Based on needs assessment done 1999-2000 Management training network in five Russian Management training network in five Russian

cities (expand to Ukraine later)cities (expand to Ukraine later) Will train 1200 managers of local and regional Will train 1200 managers of local and regional

newspapers over three yearsnewspapers over three years Focus: Financial independence, budgetingFocus: Financial independence, budgeting Follow-up training of journalists in economics and Follow-up training of journalists in economics and

business and investigative journalismbusiness and investigative journalism

General: Also, major learning programs in business/economic journalism and in media development in Latin America, Asia, Africa.

WBI Investigative Journalism Program – Current Developments

Core Course Offered by DL – approx 500 journalists in Core Course Offered by DL – approx 500 journalists in FY01 in Africa, LAC (English, French, Spanish + FY01 in Africa, LAC (English, French, Spanish + Portuguese)Portuguese)

Internet Course – advanced stage of development – Internet Course – advanced stage of development – will be offered on a pilot basis Spring 2001.will be offered on a pilot basis Spring 2001.

Access to information a key component of these coursesAccess to information a key component of these courses Media self regulation + codes of conduct under Media self regulation + codes of conduct under

development, in collaboration with Commonwealth development, in collaboration with Commonwealth Press UnionPress Union

Major program of learning/training with partners for Major program of learning/training with partners for thousands of journalists in latin americathousands of journalists in latin america

Setting Priorities

Because nature of media-power relationship, many non-Because nature of media-power relationship, many non-free states fear freedom of mediafree states fear freedom of media

But many also realize early need for strong business and But many also realize early need for strong business and economics coverage (“Asian Tigers,” now China)economics coverage (“Asian Tigers,” now China)

An hypothesis: competent economics journalism leads An hypothesis: competent economics journalism leads to stronger independent financial position and political to stronger independent financial position and political opening for all media (SE Asia, Central Europe, Baltics)opening for all media (SE Asia, Central Europe, Baltics)

Issues within the Media

Television and radio are last to leave state control Television and radio are last to leave state control (Western Europe, BBC)(Western Europe, BBC)

Distinction between printed media (no subsidies Distinction between printed media (no subsidies should be given?) and other media?should be given?) and other media?

Cultural and language issues also play a role Cultural and language issues also play a role (France, Belgium)(France, Belgium)

Newspapers and power of internet can have big Newspapers and power of internet can have big impact on accountability and raising overall quality impact on accountability and raising overall quality of all media of all media

Myths?

State ownership is main problem for media in State ownership is main problem for media in developing countries (instead: developing countries (instead: political, economic political, economic and legal obstructiveness is much more rampant and legal obstructiveness is much more rampant and difficult to address)and difficult to address)

The media is a “tool” for development, education, The media is a “tool” for development, education, environmental awareness environmental awareness ((insteadinstead: a free media : a free media will increase the flow of information among will increase the flow of information among players in developmental processes but players in developmental processes but independence demands that it be no one’s tool)independence demands that it be no one’s tool)