Economic Policy Review ISSN 1313 - 0544

Transparency and Economic Growth

Author: Svetla Kostadinova / 29.03.2007
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It is already obvious to everyone that the proposed amendments to the Law on Access to Public Information are illogical, irrational, truly disturbing, and must therefore not be passed. What is the issue in brief?

Since the year 2000, in Bulgaria there has been a Law on Access to Public Information (LAPI), which enables the citizens and all interested parties to have access to information provided by state bodies or regional administrations.

At present, if one requires such information, they have to, more or less, go through the following steps:

  1. Fulfill a notice for access to information;
  2. Send it to the appropriate body of power;
  3. Receive a response within 14 days;
  4. Pay a tax, defined by the Minister of Finance for the carrier of the information (floppy disk, CD, mail, etc.).

As a result of the proposed amendments, the situation will change in the following way:

  1. One should decide which of two possible notices they should fulfill - Notice for access to information or Notice for reuse of information of the public sector. Since, practically, certain information is distributed in the public sector, every notice may provide grounds for being defined as a "second usage", and the administration may require that all the notices be presented in this way.
  2. The catch with the Notice for reuse of information is that one has to prove interest - a condition which will automatically limit the possibility for more than half of the firms and citizens. On the other hand, it is unclear who will be in charge of deciding and on the basis of what criteria will be determined is there or isn't there interest present.
  3. Receive response in a 20 day period
  4. Access that is presently allowed may be denied to parts of certain documents.
  5. Pay a fee that must not be significantly higher than the costs of retrieving the information - since this detail may be understood differently by the various administrations, it is logical to foresee tax increases.

Without commenting on the violation of the basic right for access to information and the insolent way of introducing of the draft law to Parliament (without pre-discussion and analyses), we strive to present the possible consequences, if the amendments are to be voted. We have to point out that the information for the implementation of the LAPI is retrieved from the Ministry of State Administration and Administrative Reform and refers to 2005.

Since the cost-benefit analyses we implemented did not identify any benefits at all, we tried to calculate the possible costs.

Direct costs

  • - Payment of higher taxes - for the calculation of the costs we take as grounds the present amount of money gathered by these taxes, according to data from the National Statistical Institute. Since part of these notices for access to information are verbal, we calculated only the part of them being written. The common costs for higher taxes would be 60000 lv.
  • - Costs arising from the prolongation of the period for response - the prolonged time period will most probably affect the activities of some of the private firms, which will fail to fulfill certain services within the time limits. For the calculation of the costs we take into consideration the number of all notices for access to information, posted by firms; then we suppose that at least half of them will manage to prove interest, and we calculate the amount of the lost total value as a consequence of the increased time for allowance of access to information. We think that the time lost will not affect most of the firms and their activities, but we suppose that at least some of them will have to pay damages. Total amount of the damages will be 75000 lv.
  • - Costs for administration training for provision of the new regulations - trainings cost money. According to our analysis, at least 1 person from each of the 400 state and regional bodies will have to be trained. If the training lasts one day - the total cost of this will be 12000 lv.
  • - Costs for going to court while appealing the negation of access to information - since the administration will be granted more power and will exercise it as it deems appropriate, we suppose that the number of appeals will double. If we accept that the appeals will have to pass through at least 2 instances of the court, which includes - paying to lawyers, paying taxes to the court (equally for the part of the petitioner), and paying the salaries of the state jurists. We include also all of the costs for the court itself as well. The total sum amounts 50000 lv.

And these are only some of the direct payments that will arise once the amendments are accepted. They tend to be insignificant though, compared to the estimation of the total effect on the economy from the lack of transparency and the lack of access to information.

Common effects to the economy

Increase in the expenditures covering the access to information leads to increase of the work of the government, increase in the costs of bargains, and decrease in common welfare.

The consequences of these effects need a more thorough estimation analysis. Nevertheless, some simple relativities should be bared in mind.

A review of the World Bank[1] from 2005 shows that:

  • More transparent societies have more effective governments - the possibility of following closely the work of the administration is a reason for improvement of the provided services.
  • The transparency influences positively the income per capita - the eased access to information means knowledge and awareness of government policies; there is predictability and the possibility for taking more informed decisions on the part of the economic subjects. This leads to increased effectiveness of the economy.
  • The transparency also influences the competitiveness of the economy.
  • The transparency also contributes to decreased levels of corruption
  • The transparency also encourages investment - local and foreign investors are clear about government policies, and thus they may easily estimate the risks associated with investing in the Bulgarian economy.

  

An important conclusion from the review of the World Bank is that lower transparency leads to an average of 2% lower economic growth. For each economy this is of great importance. The conclusion we draw is that the proposed amendments to the law will affect negatively both society and the economy, and they must therefore be rejected.



[1] "Transparenting Transparency" Initial Empirics and Policy Applications, Ana Bellver and Daniel Kaufmann , The World Bank, draft, September 2005.