## How New Technologies like Blockchain Can Help Fight Corruption ## Source details **Canonical URL:** [How New Technologies like Blockchain Can Help Fight Corruption](https://www.imf.org/en/publications/fandd/issues/2018/03/wellisz) ## Other formats - [Markdown version](/en/publications/fandd/issues/2018/03/wellisz/index.md) - [Structured JSON version](/en/publications/fandd/issues/2018/03/wellisz/index.json) - [Bundle manifest](/en/publications/fandd/issues/2018/03/wellisz/bundle-manifest.json) ## Bibliographic details - Authors: CHRIS WELLISZ - Published: March 1, 2018 --- ### Overview - 21st century technologies such as blockchain and big data offer new tools to promote transparency and integrity. - Corruption remains a significant global problem, undermining growth, diverting public funds, and discouraging human capital investment. - Examples in the article show practical applications of digital tools by activists, startups, charities, and governments. ### Case studies and implementations - Ukraine — ProZorro.Sale - An electronic auction system created by activists to bring transparency to sales of public assets. - In its first 13 months, ProZorro.Sale handled $210 million. - Ukraine’s population cited as 44 million. - Ukraine ranked 131st among 176 countries on Transparency International’s Corruption Perceptions Index 2016. - AID:Tech and humanitarian aid - Platform ensures integrity of charitable contributions and social welfare payments using blockchain. - Irish Red Cross pilot: five hundred electronic vouchers worth $20 apiece were redeemed in Lebanon; no funds were lost. - AID:Tech reported raising between $3 million and $5 million from investors and planned to open offices in Singapore and Dubai. - Company goal: have at least 100,000 people on the platform by June. - Signatura and Teneris (Argentina and procurement) - Signatura provides digital signing and notarization using blockchain to ensure immutability. - Used in Córdoba to make financial disclosure forms visible and immutable. - Teneris: procurement platform to solicit bids, reducing opportunities for bribery and bid rigging. - Supercivicos (Mexico) - Mobile app for citizens to report substandard public services with GPS-tagged videos to build a database for civic groups and agencies. ### Technologies and mechanisms described - Blockchain (distributed ledger technology) - Functions as a means of exchange and as a database that automatically registers transactions. - Records are encrypted and stored across a network of computers rather than in a central location, making them difficult to alter or steal. - Originally developed for Bitcoin; adapted for multiple uses including remittances, social welfare, aid distribution, land-title registration, document notarization, and procurement. - Big data - Aggregates and analyzes government spending and contracting data to detect patterns of waste, fraud, and corruption. - Can reveal irregularities such as concentration of contracts among specific individuals or firms. - Complementary digital tools - QR-code–enabled cards for beneficiaries to redeem vouchers. - Dashboards for real-time tracking of spending by recipients. - GPS-enabled citizen-reporting apps to map and document service failures. ### Impacts, costs, and scale - Global cost of bribery alone estimated at as much as $2 trillion a year. - Comparison: $2 trillion is described as about equal to the GDP of Italy and many times the $142 billion in global development aid. - IMF 2016 study cited: “Corruption: Costs and Mitigating Strategies.” - ProZorro.Sale’s $210 million in 13 months compared to conventional privatization sales over the past five years (described as “almost as much”). - AID:Tech’s potential customer base framed as “in the billions” for government and social-welfare agencies. ### Limitations, challenges, and caveats - Blockchain’s limitations - Does not eliminate corruption that occurs after contracts are awarded (for example, use of shoddy materials). - Immutable records do not by themselves enforce quality or physical compliance. - Institutional and political constraints - Digital tools require supportive institutions and political will to be effective. - Example: IMF and World Bank criticized Ukraine for undermining its National Anti-Corruption Bureau and for failing to create an independent anti-corruption court. - Quote: “E-tools are important, but institutions are far more important.” — Viktor Nestulia, Transparency International Ukraine. ### Policy implications and recommendations - Combine technology with institution building - Digital platforms should complement, not replace, strong institutions, independent oversight, and anti-corruption courts. - Use data analytics for oversight - Big data can be deployed to monitor spending and contracting to spot patterns indicative of corruption. - Mobilize citizen engagement - Tools that enable citizens to report and document problems (with GPS, video, and public dashboards) can pressure officials and guide remedial action. - Leverage private–public partnerships - Start-ups and private firms can provide scalable solutions for governments, charities, and social-welfare agencies to increase transparency and reduce leakage. - Design for direct transfers and traceability - Systems that deliver funds directly to beneficiaries and provide real-time tracking can reduce intermediaries and opportunities for diversion. *F&D Magazine — CHRIS WELLISZ, March 2018* --- ## Content in this bundle - **محاربو التكنولوجيا الرقمية** - [محاربو التكنولوجيا الرقمية (Markdown version)](/-/media/files/publications/fandd/article/2018/march/ar/wellisz.pdf.md){rel="alternate" type="text/markdown"} - [محاربو التكنولوجيا الرقمية (PDF)](/-/media/files/publications/fandd/article/2018/march/ar/wellisz.pdf){rel="external" type="application/pdf"} - **Guerreros digitales ● Ejercicio de equilibrio ● Finanzas y Desarrollo ● Marzo de 2018** - [Guerreros digitales ● Ejercicio de equilibrio ● Finanzas y Desarrollo ● Marzo de 2018 (Markdown version)](/-/media/files/publications/fandd/article/2018/march/es/wellisz.pdf.md){rel="alternate" type="text/markdown"} - [Guerreros digitales ● Ejercicio de equilibrio ● Finanzas y Desarrollo ● Marzo de 2018 (PDF)](/-/media/files/publications/fandd/article/2018/march/es/wellisz.pdf){rel="external" type="application/pdf"} - **Les croisés du numérique** - [Les croisés du numérique (Markdown version)](/-/media/files/publications/fandd/article/2018/march/fr/wellisz.pdf.md){rel="alternate" type="text/markdown"} - [Les croisés du numérique (PDF)](/-/media/files/publications/fandd/article/2018/march/fr/wellisz.pdf){rel="external" type="application/pdf"} - **Борцы цифрового фронта – Финансы и развитие – март 2018 года** - [Борцы цифрового фронта – Финансы и развитие – март 2018 года (Markdown version)](/-/media/files/publications/fandd/article/2018/march/ru/wellisz.pdf.md){rel="alternate" type="text/markdown"} - [Борцы цифрового фронта – Финансы и развитие – март 2018 года (PDF)](/-/media/files/publications/fandd/article/2018/march/ru/wellisz.pdf){rel="external" type="application/pdf"} - **How New Technologies like Blockchain Can Help Fight Corruption - IMF F&D Magazine** - [How New Technologies like Blockchain Can Help Fight Corruption - IMF F&D Magazine (Markdown version)](/-/media/files/publications/fandd/article/2018/march/wellisz.pdf.md){rel="alternate" type="text/markdown"} - [How New Technologies like Blockchain Can Help Fight Corruption - IMF F&D Magazine (PDF)](/-/media/files/publications/fandd/article/2018/march/wellisz.pdf){rel="external" type="application/pdf"} - **数字化战士 - <金融与发展>, 2018年3月号·第55卷·第1期, 国际货币基金组织季刊** - [数字化战士 - <金融与发展>, 2018年3月号·第55卷·第1期, 国际货币基金组织季刊 (Markdown version)](/-/media/files/publications/fandd/article/2018/march/zh/wellisz.pdf.md){rel="alternate" type="text/markdown"} - [数字化战士 - <金融与发展>, 2018年3月号·第55卷·第1期, 国际货币基金组织季刊 (PDF)](/-/media/files/publications/fandd/article/2018/march/zh/wellisz.pdf){rel="external" type="application/pdf"} --- _Source: https://www.imf.org/en/publications/fandd/issues/2018/03/wellisz_