Journalism and Economic Development Economics and Business Information Empowering Change Mark Nelson, World Bank Institute

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. ” Nobel Prize-winning Indian Economist Amartya Sen “ It is now generally recognized that better, more timely, information results in better, more efficient resource allocations. ” Joseph Stiglitz, Former World Bank Chief Economist, Noble Prize 2001

Economic and Institutional Reform Go 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 creates “ culture of truth-telling ” where facts can be checked and verified

WAN WEF June 2001, Mark Nelson, World Bank Progress among successful reformers Advertising revenue growth , in percent

Sources: Freedom House, M. Nelson’s calculations

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)

WAN WEF June 2001, Mark Nelson, World Bank The Enabling Environment Public Sector: laws, regulations, decentralization of power into regions/local governments Private Sector: corporate governance, quality of banking and financial sector, knowledge economy Media: management, ownership, advertising market (alternative sources of revenue), journalist skills

WAN WEF June 2001, Mark Nelson, World Bank Entry Points Governance reforms: inclusion of media issues in training and implementation of reforms Public sector reforms: stronger emphasis on access to information at all levels, privatization of media, encouraging foreign investment in media Private sector: building knowledge about links between economic performance and good corporate governance/openness Knowledge economy: showing links between successful use/creation of knowledge and quality/ freedom of media

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

1. Laws and Regulations that Influence Media Content (Selected examples from Freedom House) Low interferenceModerateHigh 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

2.Economic Pressures to Influence Content (Selected examples from Freedom House) Low interferenceModerateHigh interference Czech Republic Estonia Latvia Lithuania Macedonia Poland Slovakia Albania Azerbaijan Bulgaria Bosnia Georgia Hungary Russia Macedonia Moldova Tajikistan Turkey Turkmenistan Yugoslavia

3. Political Pressures and Controls on Media Content (Selected examples from Freedom House) Low interferenceModerateHigh interference Bulgaria Czech Republic Estonia Latvia Lithuania Slovakia Slovenia Bosnia Georgia Hungary Macedonia Poland Romania Ukraine Albania Azerbaijan Belarus Kazakhstan Russia Turkey Tajikistan

Control of Corruption and Freedom of the Press High Low High Freedom of the Press (Freedom House) Control of Corruption [kkz]

HungaryEstoniaRussiaAzerbaijan Parliamentary legislation DecreesCentral Bank Influence Firms Reporting Negative Impact of High Level Corruption ‘ State Capture ’ Source: WBES Survey 1999, 20 transition countries %of all Firms report negative impact of grand corruption % % % % % % % % % % Adverse Impact of ‘Purchases’ of:

State Capture: A By-Product of Low Civil Liberties and Slow Economic Reforms Degree of Civil Liberties in Transition Economies Degree of Economic Reforms Very High State Capture

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)

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

WAN WEF June 2001, Mark Nelson, World Bank Key Targets for Media Work Not just journalists Media managers, editors, publishers, owners Public officials who deal with information Corporate managers and information providers, private sector associations Academics, economists, journalism schools