Economic Information Empowering Change

1
Economic Information Empowering Change
Presentation of the WDR 01
Consultative Meeting on Role of Media Access to
Business and Economic Information April 12, 2001

• World Bank Institute
• D. Kaufmann M. Nelson
• with R. MacDonell, R. Stapenhurst, and T.
  Carrington

http//www.worldbank.org/wbi/governance
2
Media and the Economy

• There has never been a famine in any country
  that has been a democracy with a relatively free
  press. . . I know of no exception.
• Amartya Sen
• It is now generally recognized that better,
  more timely, information results in better, more
  efficient resource allocations.
  Joseph Stiglitz
• If you cannot measure and disseminate it, you
  cannot change it.
• Anonymous

3
Sources Freedom House, M. Nelsons Calculations
4
Problems of Media in Emerging Economies

• Lack of legal protections for free speech
• Repressive misuse of libel insult laws
• Weak institutional capacity to respond to media
  disclosures
• Weak management and corporate governance within
  media sector
• Lack of independent finance Dependence on
  subsidies, state payments, oligarchs, rather
  than relying on readers and advertising
• Insufficient expertise on key subjects
  (economics, business, environmental issues,
  governance)

5
Broad Economic and Institutional Reform
hand-in-hand with Strengthening the Media

• Economic growth spurs demand for information
• Providers of that information compete for new
  audiences and advertisers
• Media becomes more independent and begins to play
  crucial role of monitoring public and private
  sector behavior
• Advocate for institutional change
• Demand for rigorous information/data, which
  empowers

6
Case Study in Poland Rzeczpospolita

• Government sold stake in Party daily (1991)
• Managers did management training
• Journalists studied economics
• Beefed up economics/ business coverage
• Advertising revenues soared, spurred by strong
  demand for business page
• Today newspaper is independent, profitable

7
Towards Framework for Understanding the Media
Environment Data on Interference in the Media

• 1. Legal Structures Laws and regulations that
  censor media content
• 2. Political Pressures Controls on content
  imposed by authorities, political parties,
  licensing procedures
• 3. Economic Measures Bogus tax inspections,
  monopolies on newsprint and subsides to
  obedient media
• Source the data Freedom House
• WDR 01 also doing new work in this area

8
1. Laws and Regulations that Influence Media
Content (source Freedom House)
Low interference Moderate High interference
Czech Republic Estonia Hungary Latvia Poland Romania Russia Slovenia Albania Armenia Bosnia Bulgaria Georgia Macedonia Slovakia Ukraine Azerbaijan Belarus Croatia Kazakhstan Tajikistan Turkey Turkmenistan Uzbekistan
9
2. Economic Pressures on Media to Influence
Content (source Freedom House)
Low interference Moderate High interference
Czech Republic Estonia Latvia Lithuania Macedonia Poland Slovakia Albania Azerbaijan Bulgaria Bosnia Georgia Hungary Russia Macedonia Moldova Tajikistan Turkey Turkmenistan Yugoslavia
10
3. Political Pressures and Controls on Media
Content (source Freedom House)
Low interference Moderate High interference
Bulgaria Czech Republic Estonia Latvia Lithuania Slovakia Slovenia Bosnia Georgia Hungary Macedonia Poland Romania Ukraine Albania Azerbaijan Belarus Kazakhstan Russia Turkey Tajikistan
11
Illustration of Data Empowering Worldwide
Indicators
12
Voice and Transparent Information Matters for
Developmental Outcomes (source KKZ data from
170 countries)
Source KKZ 1999
13
Control of Corruption and Freedom of the Press
High
Control of Corruption kkz
Low
High
Low
Freedom of the Press (Freedom House)
14
The Dividend of Good Governance
Note
The bars depict the simple correlation between
good governance and development outcomes. The
line depicts the
predicted value when taking into account the
causality effects (Development Dividend) from
improved governance to better
development outcomes. For data and methodological
details visit http//www.worldbank.org/wbi/governa
nce.
15
Firms Reporting Negative Impact of High Level
CorruptionState Capture Source WBES Survey
1999, 20 transition countries

50

45

40

35

30
of all Firms report negative impact of grand
corruption

25

20

15

10

5
0
Hungary
Estonia
Russia
Azerbaijan
Adverse Impact of
Purchases of
Parliamentary legislation
Decrees
Central Bank Influence
16
State Capture exists where incomplete Civil
Liberties and slow Economic Reforms
Very High State Capture
Degree of Economic Reforms
Degree of Civil Liberties in Transition Economies
http//www.worldbank.org/wbi/governance
17
The Media within Institutional Reform

• Controlled media is at the heart of political
  power in many weak, unstable regimes
• Media was also central to establishment of
  oligarchy in post-Soviet states
• When free and competent, has huge cross-sectoral
  and cross-institutional reach
• Deregulation of media early in reform process has
  big impact (Poland)
• Must be coupled with other institutional reforms
  (Russia)

18
What Some Countries Do

• Public sector reforms that stress public access
  to records, documents, decisions
• Eliminate insult laws aimed to protect leaders
  liberalize libel laws strengthen free speech
  protections
• Privatize state media and detach broadcasting
  regulators from political influence

19
Role of IFIs and Donors

• Set an example by providing access to documents,
  decisions, people, data internet power
• Emphasize access in public sector reforms
• Encourage governments (central, regional, local)
  to end subsidies to media
• Involve media early in governance diagnostics, in
  good governance programs, CDF, PRSP and other
  consultative processes
• Train media in management, specialized
  journalistic fields

20
A Learning Program Illustration Regional Media
Capacity Building in Russia/CIS

• Based on needs assessment done 1999-2000
• Management training network in five Russian
  cities (expand to Ukraine later)
• Will train 1200 managers of local and regional
  newspapers over three years
• Focus Financial independence, budgeting
• Follow-up training of journalists in economics
  and business and investigative journalism

General Also, major learning programs in
business/economic journalism and in media
development in Latin America, Asia, Africa.
21
WBI Investigative Journalism Program Current
Developments

• Core Course Offered by DL approx 500
  journalists in FY01 in Africa, LAC (English,
  French, Spanish Portuguese)
• Internet Course advanced stage of development
  will be offered on a pilot basis Spring 2001.
• Access to information a key component of these
  courses
• Media self regulation codes of conduct under
  development, in collaboration with Commonwealth
  Press Union
• Major program of learning/training with partners
  for thousands of journalists in latin america

22
Setting Priorities

• Because nature of media-power relationship, many
  non-free states fear freedom of media
• But many also realize early need for strong
  business and economics coverage (Asian Tigers,
  now China)
• An hypothesis competent economics journalism
  leads to stronger independent financial position
  and political opening for all media (SE Asia,
  Central Europe, Baltics)

23
Issues within the Media

• Television and radio are last to leave state
  control (Western Europe, BBC)
• Distinction between printed media (no subsidies
  should be given?) and other media?
• Cultural and language issues also play a role
  (France, Belgium)
• Newspapers and power of internet can have big
  impact on accountability and raising overall
  quality of all media

24
Myths?

• State ownership is main problem for media in
  developing countries (instead political,
  economic and legal obstructiveness is much more
  rampant and difficult to address)
• The media is a tool for development, education,
  environmental awareness (instead a free media
  will increase the flow of information among
  players in developmental processes but
  independence demands that it be no ones tool)