Corruption Realities Index 2010

This in about Economy, and tagged , , was written by on May 25, 2011 . 23 Comments

The most famous corruption indicator is Transparency International’s Corruption Perceptions Index. Its only problem is that the perceptions of their self-appointed experts have nothing to do with reality!

As I explained in previous posts on this blog, it suffers from numerous flaws. Part of it has to do with its questionable methodology: using changing mixes of different surveys to gauge a fluid, opaque-by-definition social phenomenon. Another is its reliance on its appeal to authority, the theory being that “experts” in business and think-tanks know more about corruption relative to anyone else. Countries with more regulations are systematically prejudged, as are those facing hostile media environments such as Russia or Venezuela. Above all, the CPI doesn’t pass the face validity test – in other words, many of its results are frankly ludicrous. Is it truly plausible that Russia (2.1) is as corrupt as failed states like Zimbabwe (2.4) or D.R. Congo (2.0), or that Italy (3.9) is more corrupt than Saudi Arabia (4.7) which is a feudalistic monarchy!?

This suggests that we urgently need another, more objective index. Thus I present the Corruption Realities Index (CRI)!

Unlike my previous attempt at this, the Karlin Corruption Index – which was rightly critiqued for being no less subjective than the CPI (though I do believe it was more accurate) – this time round I am drawing on real world data. In particular, there are three corruption indices that aren’t as well known as the CPI, but far more useful.

One of them is Transparency International’s less well-known Global Corruption Barometer. Every year, they poll respondents on the following question: “In the past 12 months have you or anyone living in your household paid a bribe?” The answers hint at the prevalence of corruption in everyday life, as experienced by a sample of normal people, and as such they almost certainly offer a better picture than the perceptions of experts who are prone to the narrative fallacy and are unduly influenced by the ideological biases of the international business media (e.g. op-eds in The Economist or the WSJ). A good example is the reputational fallout Russia experienced in the wake of the prosecution of Mikhail Khodorkovsky, which saw its CPI retreat despite the lack of any noticeable increase in corruption on the ground.

Another key resource is the Global Integrity Report, which evaluates countries on their “actually existing” Legal Frameworks and Actual Implementation on issues such as “the transparency of the public procurement process, media freedom, asset disclosure requirements, and conflicts of interest regulations.” This involves line by line examination of the laws in question, and the “de facto realities of practical implementation.” Crucially, the assessments are blindly reviewed by a panel of peer reviewers and outside experts, which is an important antidote to bias.

Finally, there is the International Budget Partnership, which – believe it or not – assesses budget transparency and accountability. It compiles an Open Budget Index on the basis of factors such as budget documents availability, and the effectiveness of oversight by legislatures and supreme audit institutions. People who think of Eastern Europe as a black hole of government corruption will be surprised to learn that it is the best performing region after the developed world, while the Middle East, China, and sub-Saharan Africa are distinguished by their opacity.

Data from all three sources – to the extent that it is available – is amalgamated and fed through a formula to produce the Corruption Realities Index.

GCB is the percentage of people saying they or their households paid a bribe in the past 12 months from 2010 data. GILF is the Global Integrity Legal Framework score. GIAI is the Global Integrity Actual Implementation score. Most Global Integrity data is from 2007-2010. OBI is the Open Budget Index score from 2010 data. The CRI is the Corruption Realities Index. More details are given at the bottom of the table.

Country GCB /% GILF /100 GIAI /100 OBI /100 CRI
1 Denmark 0 10.0
2 UK 1 87 9.1
3 Norway 1 83 9.0
4 Korea, South 2 96 82 71 8.7
5 Finland 2 8.6
6 Netherlands 2 8.6
7 Switzerland 2 8.6
8 Germany*† 2 83 83 67 8.4
9 Portugal*† 3 86 86 58 8.3
10 Iceland 3 8.3
11 Australia*† 2 78 78 8.2
12 Israel*† 4 83 83 8.2
13 USA 5 90 78 82 8.1
14 Slovenia 4 68 8.1
15 New Zealand 4 90 8.0
16 Ireland 4 8.0
17 Brazil 4 85 66 71 7.9
18 Spain 5 84 74 63 7.8
19 Canada 4 90 61 7.8
20 Hong Kong 5 7.8
21 Georgia 3 86 58 55 7.8
22 Bulgaria 8 97 73 56 7.7
23 Croatia 5 57 7.7
24 France 7 87 68 87 7.7
25 Japan 9 91 76 7.7
26 Argentina 12 97 77 56 7.5
27 Taiwan 7 7.4
28 Latvia 15 93 76 7.3
29 Italy 13 84 71 58 7.1
30 Poland 15 86 71 64 7.0
31 Singapore 9 7.0
32 Austria 9 7.0
33 Czech Republic 14 84 64 62 6.9
34 Peru 22 93 70 65 6.7
35 Chile 21 87 66 72 6.6
36 Indonesia 18 92 56 51 6.6
37 FYR Macedonia 21 90 65 49 6.5
38 Vanuatu 16 84 55 6.5
39 Fiji 12 64 64 6.5
40 Kosovo 16 78 60 6.5
41 Romania 28 95 64 59 6.3
42 Armenia* 22 72 72 6.3
43 China 9 76 43 13 6.2
44 Hungary 24 83 62 6.2
45 Serbia 17 80 44 54 6.2
46 Russia 26 90 54 60 6.1
47 Colombia 24 89 49 61 6.1
48 Philippines 16 84 31 55 6.0
49 Malaysia 9 57 37 39 6.0
50 Luxembourg 16 6.0
51 Papua New Guinea* 26 69 69 57 6.0
52 Bosnia & Herzegovina 23 90 39 44 5.8
53 Thailand 23 79 50 42 5.8
54 Venezuela 20 84 39 34 5.8
55 Lithuania 34 85 63 5.8
56 Mexico 31 83 59 52 5.8
57 Greece 18 5.8
58 Moldova 37 89 59 5.7
59 Solomon Islands 20 63 52 5.6
60 Belarus 27 81 48 5.6
61 Turkey 33 75 57 57 5.5
62 Bolivia 30 78 56 13 5.3
63 Ghana 37 78 51 54 5.3
64 Ukraine 34 77 39 62 5.2
65 India 54 86 55 67 5.0
66 Pakistan 49 91 47 38 4.9
67 El Salvador 31 37 4.8
68 Azerbaijan 47 88 40 43 4.8
69 Lebanon 34 65 39 32 4.7
70 Mongolia 48 70 43 60 4.6
71 Kenya 45 62 45 49 4.5
72 Palestine 51 73 41 4.3
73 Sierra Leone 71 79 58 4.2
74 Zambia 42 36 4.1
75 Senegal* 56 65 65 3 4.0
76 Uganda 86 99 45 55 4.0
77 Nigeria 63 73 44 18 3.8
78 Vietnam 44 56 28 14 3.7
79 Cameroon 54 69 39 2 3.6
80 Iraq 56 75 32 0 3.4
81 Liberia 89 64 43 40 3.1
82 Afghanistan 61 21 2.8
83 Cambodia 84 58 30 15 2.6

* The Global Integrity scores for Legal Framework and Actual Implementation were given as one averaged figure, so bear in mind that
† Global Integrity scores were collected for 2006 or earlier, so may no longer be up to date.
The CRI for countries in italics was generated on the basis of only one piece of data, the percentage of people saying they or someone in their household paid a bribe in the last year. As such, their CRI has a high margin of error.

Formulas

  1. For countries with all four data points. (10-sqrt(GCB))*5 + (GILF + GIAI)/5 + sqrt(OBI) = CRI, with the GCB/GILF/GIAI/OBI weighted 50-20-20-10.
  2. For countries with no OBI. (10-sqrt(GCB))*5 + (GILF + GIAI)/4 = CRI, with the GCB/GILF/GIAI weighted 50-25-25.
  3. For countries with no Global Integrity data. (10-sqrt(GCB))*7.5 + sqrt(OBI)*2.5 = CRI, with the GCB/OBI weighted 75-25.
  4. For countries with only GCB. (10-sqrt(GCB))*10, with the GCB being the only weight by definition.

Needless to say, the accuracy of any CRI score increases with the amount of data it is based on.

I did not bother including any country that doesn’t have polling data on the prevalence of bribery over the past year, as it is an indispensable indicator. One can only hope that the Global Corruption Barometer will expand its coverage in the coming years, as the CRI depends so much on its data.

One major group of countries that isn’t assessed here, because of a lack of data, are the Gulf monarchies. If we make the (rather generous?) assumption than only 5% of their households pay a bribe in any given year, then based on the UAE’s and Kuwait’s Global Integrity scores and Saudi Arabia’s OBI, these countries will have the following CRI: Kuwait (6.2), UAE (6.7), Saudi Arabia (4.0).

This is but the beginning. I hope to search out more sources of data like the GCB, and keep expanding the Corruption Realities Index in the years ahead.

EDIT 05/26/2011: Note that there are going to be substantial internal variations for corruption within a country, as different regions will have varyingly corrupt bureaucracies and police forces. To take the example of Russia, for instance, a recent FOM poll indicates that the frequency of requests for bribes ranged from, say, 7% in Omsk oblast, to 31% in St.-Petersburg. This would translate into CRI scores of 7.3 and 5.9, respectively.

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