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70 Fighting the Diseases of Poverty
local authority undermines potential effectiveness of local jurisdictions
as they have no power to affect resource allocations or
decision-making and can be the victim of “provider capture” where
centrally deployed staff determine service, organization and
delivery.
Control of corruption is straightforward. It captures the extent and
nature of corruption among public officials, including tracking the
incidence of nepotism, cronyism and bribes among civil servants,
irregularities in public purchasing and oversight, and the nature and
extent to which government manages corruption.
Corruption can be defined as “use of public office for private gains”
(Bardhan, 1997) or “the sale by government officials of government
property for personal gain” (Shleifer and Vishny, 1993). With either
definition good government hinges on the incentives for and
accountability of public servants.
Forms of corruption vary. Sparrow (1996) describes the extent of
fraud in the US Medicare program, which is exacerbated by heavy
reliance on electronic payments in compensating providers. Disinterest
on the part of law enforcement officials reflects a belief that
costs appear to outweigh the benefits of investigation and prosecution.
Large scale fraud discussed in Sparrow suggests the scope of
the possible in developed countries where significant resources are
devoted to health care; there is heavy reliance on automated
payment arrangements most of which are never checked by
humans; and inadequate controls are in place to prevent fraud and
abuse. Similar types of fraud exist in some middle income countries,
but there are far less sophisticated means employed with ample
benefit in developing countries.
Governance indicators are built on perceptions of in-country and
outside observers, and their application has emphasized crosscountry
comparisons. On the first point, perceptions are powerful
factors in shaping behavior. If investors perceive corruption or
patients perceive poor quality, it discourages private investment or