Bribery is costing the world $1 trillion a year with the burden falling disproportionately on the billion or so people living in extreme poverty, the World Bank said yesterday.

In a report on the quality of governance in the world's countries over the past decade, the Bank added that many poor countries had significantly improved governance and clamped down on corruption in recent years.

"Such improvements are critical for aid effectiveness and for sustained long-run growth," said Daniel Kaufmann, co-author of the report and director of global programs at the World Bank Institute, the Bank's research arm.