Such studies rarely lead to direct dollar estimates of the extent of bribery or economic impacts, especially at the sectoral level, but they can be used as an independent variable in regression analysis to provide evidence of correlations between high perceived corruption and poor development outcomes. For example, across countries, high perceived general levels of corruption are associated with lower spending on proxies for operations and maintenance. Related to this, general perceptions of corruption have been associated with lower quality infrastructure (a lower percentage of roads in good condition and more frequent power outages for example) (Tanzi and Davoodi, 1998). We will see, however, that such results are not robust, probably reflecting the weakness of general perceptions indices in measuring the extent of corruption in infrastructure.

Survey techniques can question victims directly about the extent and level of corruption they face. At the level of petty corruption, Davis (2004) used a survey approach to estimate that the average speed payment or bribe made to get connected to piped water in India works out at $2.64 per legal customer (see also Seligson, 2005). There are a few other firm and customer surveys that have included questions on the extent of petty corruption in infrastructure service provision, including the World Bank’s business environment surveys and customer surveys in countries including India, Kenya and Peru.

At the level of grand corruption, Hobbes (2005) interviewed a small number of bidders on World Bank financed projects and suggested that “all experienced bidders know that they must offer bribes in order not just to win the contract, but also successfully implement it.” He suggests that bribes are usually between 10-15 percent of the contract value, often recovered in the mark-up the bidder places on the unit prices of the procurement items. Soreide (2004) has conducted a similar, but considerably larger and more robust, survey covering international contractors based in Norway. Neither of these surveys provide infrastructure- or construction-specific data, however.

The Business Environment and Enterprise Performance Survey (BEEPS) covers over 4000 firms in 22 transition countries and was conducted for the first time in 1999-2000. The survey examines a wide range of interactions between firms and the state.<sup>3</sup> It is the largest and most detailed cross-country survey including a wide range of questions regarding both petty and grand corruption that has been carried out. The assumption of the survey is that many of the interviewed firms will be directly involved in corruption, although (for obvious reasons) survey questions tend to revolve around the corrupt activities of ‘a typical firm in your industry’ rather than asking directly about corrupt activities of the respondent firm.

In 1999, the median firm reported spending one to two percent of its revenues on unofficial payments to public officials.<sup>4</sup> At the aggregate level, across the region, the average firm suggests that it divides up its illicit payment budget as follows: 28 percent to deal with licenses, health and fire inspections, 18 percent on tax-related issues, 15 percent on securing government contracts, 12 percent for dealing with customs, 11 percent to facilitation connections to utilities and 2 percent to influence the design of legislation or 3 http://info.worldbank.org/governance/beeps/

> 4

> This amongst firms which reported a percentage and did not answer “don’t know.”

5