than to obtain something that breaks the law. This may make bribe-takers more afraid to ask for bribes as bribe-givers would no longer incriminate themselves by acceding to the request. They might thus be more willing to complain<sup>3</sup> .

In practice most governments, with the notable exception of Venezuela and Zimbabwe, reform rules when unwarranted complexity is exposed, for example, through global rankings. Most popular with policymakers are reforms of rules on registration and import licenses, a little less so on construction (World Bank, 2011). The main driver seems to be the search for “competitiveness”. This is clearly consistent with the first (“effective grease”) story, but it can also be consistent with the second (“systemic corruption”) story. Corrupt regimes may feel they can eventually steal more, at least in absolute amounts, when there is stronger economic growth. However, in this case reforms may upset the system and lead current winners to lose.

The rapidity with which some countries have embraced reforms of simple licenses might suggest they often are not an essential part of a corrupt system –but it may reflect the adaptability of corrupt players in cases where the second model applies. It is a frequent complaint of small businesses in the Middle East and North Africa, for example, that while de jure regulations are simplified (and Doing Business rankings are dramatically improving), de facto implementation remains heavily skewed towards the interests of a favored group of connected firms (World Bank, 2009).

Regardless, remaining regulation and enforcement should be designed so that even if (when) corrupted, it still provides the appropriate incentives. For example, corruption that reprioritizes useful investments (speed payments for licenses that should be issued) is considerably less harmful than corruption that facilitates or encourages poor investments (kickbacks for ignoring very poor quality construction). In terms of the bribe payer, incentives might be aligned by legalizing speed payments (as suggested above) while holding bribe payers responsible for deaths or damage related to improperly licensed construction.

# **Corruption and Infrastructure**

We now turn to infrastructure to see what existing data suggest about the nature of corruption in that sector and possible implications for policy. Aggregate indicators of corruption like the CPI say nothing about the intensity of corruption across sectors. ES at least allow us to assess how petty corruption in infrastructure sectors compares to petty corruption in other areas. It appears that bribery associated with obtaining a utility connection is not much different from bribery in other areas. What does appear more pervasive is bribery associated with construction activities, encompassing infrastructure projects. Construction firms represented in the Business Environment and Enterprise Performance Survey of Eastern Europe and Central Asia have significantly larger „bribe budgets‟ than the average firm, and they bribe more often.

> 3 The exemption of facilitation payments in the United States‟ Foreign Corrupt Practices Act could be justified on similar grounds.

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