Daniel Kaufmann (economist)

Daniel Kaufmann is the president and CEO of the Natural Resource Governance Institute, formerly the Revenue Watch Institute - Natural Resource Charter. Previously, he was a senior fellow at the Brookings Institution. He remains a nonresident senior fellow at Brookings. Prior to that, he was a director at the World Bank Institute, leading work on governance and anti-corruption.

He was born in Chile, where he grew up in the 1950s and 1960s. He later received a B.A. in economics and statistics at the Hebrew University in Jerusalem and an M.A. and Ph.D. in economics at Harvard, graduating in 1982.

For most of his professional career, Dr. Kaufmann has held positions at the World Bank, working in Eastern Europe, Africa and Latin America and conducting research around the globe. He currently directs the Natural Resource Governance Institute (NRGI), a policy institute and nonprofit organization based in New York City, with operations in more than a dozen countries.

Dr. Kaufmann is regarded as a leading expert, researcher, and policy adviser on governance and development. With his teams, he has pioneered new approaches to construct indicators for country governance and designed survey methodologies for good governance and anti-corruption programs. He has also provided practical advice to countries based on his research on economic development, governance, the unofficial economy, macro-economics, investment, corruption, privatization, and urban and labor economics, which has been published in leading journals. His papers are some of the most popular downloads in the Social Science Research Network (SSRN).

At the World Bank Institute he led work on global governance and anti-corruption. He was a senior economist for Africa, working on trade, industry and macroeconomy. He also authored the World Development Report, which distilled key lessons from his development experience. After the collapse of the Soviet Union, he became the first chief of mission of the World Bank to Ukraine, and thereafter was a visiting scholar at Harvard. Upon resuming his career at the World Bank, he served as lead economist in the research department. Then he was a manager of the finance, regulation and governance unit at the World Bank Institute.

Dr. Kaufmann is currently a full member of the Extractive Industries Transparency Initiative international board. A frequent keynote speaker on governance and development at major fora, he is often featured as a guest expert in major media outlets, and his work figures prominently in international policy and media circles.

While at the World Bank during the 1990s, Dr. Kaufmann and his colleague Aart Kraay pioneered the creation of a worldwide set of governance indicators, including voice and democratic accountability, political stability, government effectiveness, regulatory quality, rule of law, and control of corruption. The Worldwide Governance Indicators (WGI), which cover more than 200 countries, are issued annually and widely used by donor agencies, risk rating agencies, scholars, students and policy analysts.

The concept of legal corruption has evolved under the stewardship of Dr. Kaufmann and Pedro Vicente. It might be termed as processes that are legal (that is, specifically permitted, or at least not proscribed by law), but that are aimed at private gain (or the gain of narrow self interests) rather than benefitting all the people of a country—that is, governance which fails (with respect to the wording of the Preamble to the United States Constitution) to “promote the general welfare.” Dr. Kaufmann's work on legal corruption was an outgrowth of the earlier work he carried out on "state capture" with Joel Hellman. One example might be non-proscribed aspects of influence peddling resulting from campaign finance or other arrangements in some countries. In some cases, legal processes are alleged to have been changed in order to legalize certain acts, which a broad consensus might consider as corrupt.

In 2005 Dr. Kaufmann and Vicente drafted an indicator on legal corruption. Higher numbers indicate more ethical behavior. They assert that many countries have better outcomes with respect to “illegal” corruption than they have for legal corruption. This includes several presumably "developed" countries which, however, under-perform with respect to legal corruption.

Leading countries in their legal corruption control indicator (i.e., those with the lowest levels of legal corruption) included The Netherlands (the highest at 79.2), Norway, Denmark, Finland, Singapore, Iceland, New Zealand, and the United Arab Emirates, with Jordan, Hong Kong, and Chile also ranking relatively highly. The lowest-rated countries in their indicator include The Philippines (the lowest at 7.4), Honduras, Thailand, Ecuador, Panama, and Georgia, with Chad, Poland, Argentina and Lithuania also rated poorly. The USA is rated at 30.8, immediately below the Czech Republic and immediately above Angola, with Kenya (at 33.4) and Nigeria (at 28.8) also having similar ratings. It is worth noting that that publicly available indicator dates from 2005, so some (but not all) countries may have improved or degraded in legal corruption since then.