Global Index Highlights How Corruption Stymies Poorest Economies

Naming and Shaming

Transparency International (TI) has established a strong reputation over the years for its work assessing corruption and providing resources to counter it. Its highest-profile publication is the Corruption Perceptions Index (CPI), the 2009 edition of which came out yesterday. The index draws upon surveys and expert opinions of a range of organisations including IHS Global Insight. It does not measure incidents of corruption, but rather perceptions of levels. The former is almost impossible to assess as most instances are never revealed. The index always receives great media interest and can cause individual governments grave discomfort if their countries slip down the ranking. International donors also look closely at the results, and will cite them when deciding on priorities and setting requirements for recipients.

TI has chosen to highlight the danger that corruption poses to global economic recovery in 2009/10. Many governments are pouring stimulus funds into their economies to escape the worst recession in decades, but the effectiveness of this will be greatly diminished if the funds are diverted via corruption. While it tends to be poorer economies that figure strongly at the lower end of the table, the authors stress that no country is immune and that complacency is dangerous.

Corruption tends to be most pervasive in countries scarred by war and ongoing conflict. Somalia, Afghanistan, Sudan, and Iraq are notable on this front. Governance structures have been destroyed and there is little to prevent officials from lining their pockets. These countries also tend to be major recipients of foreign aid, the effectiveness of which is compromised by corruption. The situation locks these countries into a vicious cycle from which it is very difficult to escape. High levels of corruption undermine public trust in young governments, undermining their legitimacy and political stability more widely. TI calls on international donors to focus on strengthening institutions in these countries and to demand transparency and accountability. There also needs to be an onus on foreign investors not to feed the cycle by paying bribes in order to secure contracts and favourable treatment.

At the top end of the scale are clustered many of the most developed economies, with Western Europe particularly well represented. New Zealand nonetheless edges out Denmark for the top spot this year, the top five being rounded out by Singapore, Sweden, and Switzerland. All have very well-established public institutions, high stability, and a strong anti-corruption culture.