1. Economic Information Empowering Change World Bank Institute D. Kaufmann & M. Nelson with R. MacDonell, R. Stapenhurst, and T. Carrington Presentation of the WDR ’01 Consultative Meeting on Role of Media: April 12, 2001 Access to Business and Economic Information April 12, 2001 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.” “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.” “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.” “If you cannot measure and disseminate it, you cannot change it.” Anonymous

3. Sources: Freedom House, M. Nelson’s Calculations

4. Problems of Media in Emerging Economies Lack of legal protections for free speech Lack of legal protections for free speech Repressive misuse of libel & insult laws Repressive misuse of libel & insult laws Weak institutional capacity to respond to media disclosures Weak institutional capacity to respond to media disclosures Weak management and corporate governance within media sector 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 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) 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 Economic growth spurs demand for information Providers of that information compete for new audiences and advertisers 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 Media becomes more independent and begins to play crucial role of monitoring public and private sector behavior Advocate for institutional change Advocate for institutional change Demand for rigorous information/data, which empowers Demand for rigorous information/data, which empowers

6. Case Study in Poland: Rzeczpospolita Government sold stake in Party daily (1991) Government sold stake in Party daily (1991) Managers did management training Managers did management training Journalists studied economics Journalists studied economics Beefed up economics/ business coverage Beefed up economics/ business coverage Advertising revenues soared, spurred by strong demand for business page Advertising revenues soared, spurred by strong demand for business page Today newspaper is independent, profitable 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 1. Legal Structures: Laws and regulations that censor media content 2. Political Pressures: Controls on content imposed by authorities, political parties, licensing procedures 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 3. Economic Measures: Bogus tax inspections, monopolies on newsprint and subsides to “obedient” media Source the data: Freedom House Source the data: Freedom House WDR ‘01 also doing new work in this area WDR ‘01 also doing new work in this area

8. 1. Laws and Regulations that Influence Media Content (source: Freedom House) Low interferenceModerateHigh interference Czech Republic EstoniaHungaryLatviaPolandRomaniaRussiaSloveniaAlbaniaArmeniaBosniaBulgariaGeorgiaMacedoniaSlovakiaUkraineAzerbaijanBelarusCroatiaKazakhstanTajikistanTurkeyTurkmenistanUzbekistan

9. 2. Economic Pressures on Media to Influence Content (source: Freedom House) Low interferenceModerateHigh interference Czech Republic EstoniaLatviaLithuaniaMacedoniaPolandSlovakiaAlbaniaAzerbaijanBulgariaBosniaGeorgiaHungaryRussiaMacedoniaMoldovaTajikistanTurkeyTurkmenistanYugoslavia

10. 3. Political Pressures and Controls on Media Content (source: Freedom House) Low interferenceModerateHigh interference Bulgaria Czech Republic EstoniaLatviaLithuaniaSlovakiaSloveniaBosniaGeorgiaHungaryMacedoniaPolandRomaniaUkraineAlbaniaAzerbaijanBelarus Kazakhstan Russia TurkeyTajikistan

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

14. The ‘Dividend’ of Good Governance Infant Mortality and Corruption 0 10 20 30 40 50 60 70 80 90 WeakAverageGood Control of Corruption x Development Dividend 0 2,000 4,000 6,000 8,000 10,000 12,000 WeakAverageGood Regulatory Burden x Development Dividend Per Capita Income and Regulatory Burden Literacy and Rule of Law 0 25 50 75 100 WeakAverageGood Rule of Law x Development Dividend Per Capita Income and Voice and Accountability 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 WeakAverageStrong Voice and Accountability x Development Dividend 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/governance.

15. 0 5 10 15 20 25 30 35 40 45 50 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:

16. State Capture exists where incomplete Civil Liberties and slow Economic Reforms Degree of Civil Liberties in Transition Economies Degree of Economic Reforms http://www.worldbank.org/wbi/governance Very High State Capture

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

18. What Some Countries Do Public sector reforms that stress public access to records, documents, decisions 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 Eliminate “insult laws” aimed to protect leaders; liberalize libel laws; strengthen free speech protections Privatize state media and detach broadcasting regulators from political influence Privatize state media and detach broadcasting regulators from political influence

19. Role of IFI’s and Donors Set an example by providing access to documents, decisions, people, data – internet power… Set an example by providing access to documents, decisions, people, data – internet power… Emphasize access in public sector reforms Emphasize access in public sector reforms Encourage governments (central, regional, local) to end subsidies to media 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 Involve media early in governance diagnostics, in good governance programs, CDF, PRSP and other consultative processes Train media in management, specialized journalistic fields 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 Based on needs assessment done 1999-2000 Management training network in five Russian cities (expand to Ukraine later) Management training network in five Russian cities (expand to Ukraine later) Will train 1200 managers of local and regional newspapers over three years Will train 1200 managers of local and regional newspapers over three years Focus: Financial independence, budgeting Focus: Financial independence, budgeting Follow-up training of journalists in economics and business and investigative journalism 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) 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. 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 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 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 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) 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) 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) Television and radio are last to leave state control (Western Europe, BBC) Distinction between printed media (no subsidies should be given?) and other media? Distinction between printed media (no subsidies should be given?) and other media? Cultural and language issues also play a role (France, Belgium) 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 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) 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 one’s tool) 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 one’s tool)