Journalism and Economic Development

1
Journalism and Economic Development

• Economics and Business Information Empowering
  Change

Mark Nelson, World Bank Institute
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.
  
• 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
  

3
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

4
Progress among successful reformers Advertising
revenue growth 1994-1998, in percent
5
Sources Freedom House, M. Nelsons calculations
6
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)
  

7
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

8
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
  

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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

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

11
Economic Pressures to Influence Content
(Selected examples from Freedom House)
12
3. Political Pressures and Controls on Media
Content (Selected examples from Freedom House)
13
Control of Corruption and Freedom of the Press
High
Control of Corruption kkz
Low
High
Low
Freedom of the Press (Freedom House)
14
Firms Reporting Negative Impact of High Level
CorruptionState Capture Source WBES Survey
1999, 20 transition countries

50

45

40

35

30
of all Firms report negative impact of grand
corruption

25

20

15

10

5
0
Hungary
Estonia
Russia
Azerbaijan
Adverse Impact of
Purchases of
Parliamentary legislation
Decrees
Central Bank Influence
15
State Capture A By-Product of Low Civil
Liberties and Slow Economic Reforms
Very High State Capture
Degree of Economic Reforms
Degree of Civil Liberties in Transition Economies
http//www.worldbank.org/wbi/governance
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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)

17
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
  

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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