Transparency International Strikes Again

So the new Transparency International Corruption Perceptions Index came out last week. If you are a development geek — cough, cough — this is like Beaujolais Nouveau Day.

Not that there are any /huge/ surprises. The top ten slots are dominated by the same countries, year after year — Finland, the Netherlands, Singapore. European readers can be cheered by the fact that European countries occupy 13 of the top 20 slots.

The CPI is, of course, a perceptions survey. They poll a lot of investors and NGOs and whatnot and ask what they think. There are some obvious issues with this methodology. Other hand, they try to be rigorous about it, and keep the tests constant from country to country and from year to year. If you’re trying to measure corruption — an inherently difficult task — this is probably about the best broad-guage metric we have.

Meanwhile, a few geeky comments.

Worst country in Europe: Belarus. Big surprise, right? Belarus scores a miserable 2.1 out of a possible 10, putting them at 151st in the world. That’s below Pakistan, Nigeria, or the Republic of Congo. Awful.

Second worst country in Europe: Russia. 2.5 out of 10. #121 in the world. Tied with Nepal, the Philippines, and Rwanda. Again, no surprise.

Worst EU member: Romania. 3.1, 84th place. Tied with Panama, Algeria, and Sri Lanka. This I think is slightly unfair. Romania has made a lot of progress in the last couple of years. In fact, the current Romanian government is on the verge of toppling because of a corruption scandal. You won’t see that happen in Algeria or Panama.

But, as I said, there are some inherent problems with the methodology. It’s really measuring reputation, after all. And reputations take a long time to change. Romania’s reputation is bad, and it will take them some years to work their way out of this. The process may already have begun; their numerical score has crept up from 2.6 in 2002 and 2.9 in 2004.

Worst “Old” (pre-2004) EU member: Oh, come on, you know this one. It’s Greece, of course — 4.4, #54, just behind Tunisia and tied with Costa Rica.

Of the 10 new members admitted in 2004, nine have better scores than Greece. In some cases — Slovenia, Estonia, Malta — they’re much better. Of the 27 EU members, Greece is 24th, with only Poland, Bulgaria, and Romania doing worse. What’s the opposite of kudos?

Now let’s take a close-up look at my favorite European region — the Balkans.

Best in the region? Well… Greece, actually. Yes, they’re bad, but all their neighbors are worse. After Greece (4.4), the second best is Bulgaria, with 4.0. Then we have Croatia (3.4), Moldova (3.2), Romania (3.1), Serbia (3.0), Bosnia (2.9), Macedonia (2.7), and Albania (2.6).

Neighboring countries? Turkey fits the pattern nicely, with 3.8. Other hand, Slovenia (6.4) and Hungary (5.2) do not. With the interesting exception of Croatia, all of the other Balkan countries were carved out of the decaying husk of the Ottoman Empire. (Romania and Moldova were never formally part of the Ottoman state, but they paid tribute to the Porte and were governed by bureacrats sent from Istanbul.) The 19th-century Ottoman Empire was notorious for corruption at every level. It looks like that tradition is dying hard (if it’s dying at all).

Within the region, there’s a rough correlation with income. Greece, the richest country in the Balkans, is the least corrupt; Albania, the poorest, is the most corrupt. Not surprising, but it’s interesting to note that here, too, Croatia, breaks the pattern — the rich-ish Croats should be right behind the Greeks, not down there with the Moldovans.

The Albanians are the worst, but they’re not that bad. Their numerical score is 2.6; Romania had the same score four years ago, and Serbia was 2.3 as recently as 2003. Serb nationalists like to demonize Albanians as fabulously corrupt — a land of drug smugglers and gun-runners, “the descendants of Agas and Beys” — but, in fact, the difference is not that big. Albania is where Serbia was three years ago, and only half a point behind Serbia today. From the point of view of Finland (9.6) or Denmark (9.5), they’re all looking pretty aga-and-bey-like.

And, of course, everybody in the region is ahead of Russia.

— You know what I’d love to see? I’d love to see some scattergraphs correlating these scores with things like PPP GDP per capita. You’d see a cloud of dots around a rough diagonal line, with scores tending to rise with income. But there’d be interesting outliers on either side.

Surely someone, somewhere must have done this.

18 thoughts on “Transparency International Strikes Again

  1. Regarding comparing corruption with income:

    It would seem obvious that someone had done that, but I haven’t seen such a figure. Maybe you could do it?

  2. Doug,

    You are spot on, again. The CPI is indeed a perceptions survey, however the final results never seem to be totally off the mark. As long as they do not “sex-up” the final results it does seem a good way of measuring corruption worldwide.

    In addition, I think that you are absolutely correct when you say that the survey amounts to measuring reputation, and that reputations take a long time to change. I think this is the key point. Things can improve or deteriorate a lot faster on the ground than they are reflected on the survey.

    I would be interested to know if the BAE-Saudi and the “cash-for-honours” scandals have hit or will hit the index of the United Kingdom. Also looking forward to know how will Montenegro do (they have been under attack by Serb politicians for a while about Djukanovic and the alleged cigarette smuggling). Another interesting point is that, according to the CPI map Kosovo and Serbia are treated as one country, but in fact everyone knows that they are completely independent of each other as far as government and economy are concerned. So, I wonder what have they done, did they ignore Kosovo or did that come up with two figures separately and then added them up and divided by two.

    Anyhow, very good observations Doug. You are one clever chap.

    Yours,

    Fidel

  3. Good comments. Although, Moldova is the poorest country, and not Albania. Also, they should have had a seperate index for Kosovo.

  4. Is this the 2006 or 2007 version? In a moment of boredom sometime after 16 November 2006 (he says, checking backups), trying to figure out sensible places to invest, I collected the 1998-2006 figures for a few dozen developing countries, and was hoping this was the chance to add the 2007 table to my collection.

    Hitting the ‘linear regression’ button told me that over that period Uruguay, Bulgaria, Estonia, France, Slovakia all got 0.1 points less corrupt each year; Brazil and Poland deteriorated, Poland as fast as Bulgaria was rising

    I then discovered that there was no such thing as a Uruguay-focussed or Estonia-focussed investment trust, so set the data aside for a year.

  5. So is Slovenia generally considered not to be a part of the Balkans? I guess I’d assumed that Greece and all the countries that used to be part of Yugoslavia made up the Balkans …

  6. Interesting that there seems to be a correlation between the position on the scale and the GDP. I wonder if there is a similar correlation regarding income inequility and/or median income. I would suspect that there is.

  7. Sorry, but I hate Beaujolais. Beujolais, a mediocre but slickly packaged swill, is not such a great analogy for the Corruption Pereceptions Index. The CPI is like a fresh, young country wine in Portugal, where a lot of treading still goes on, and young girls stand in tubs and stomp on the grapes. The villagers sing drunkenly and happily, if well. The CPI is unscientific, good fun. We need more reports like this in order to make people pay attention and take notice of corruption.

  8. “You know what I’d love to see? I’d love to see some scattergraphs correlating these scores with things like PPP GDP per capita. You’d see a cloud of dots around a rough diagonal line, with scores tending to rise with income. But there’d be interesting outliers on either side.
    Surely someone, somewhere must have done this.”

    I just did it.
    (thx to Mitch above for the data)
    Here’s the link to the graph:
    http://services.alphaworks.ibm.com/manyeyes/view/SThgcEsOtha6p6kKzGIeE2-

    Illustrates what you said very well.
    Italy and Greece stick out very obviously.

    The outliers are the countries with very low corruption, the correlation totally breaks down.

  9. “You know what I’d love to see? I’d love to see some scattergraphs correlating these scores with things like PPP GDP per capita. You’d see a cloud of dots around a rough diagonal line, with scores tending to rise with income. But there’d be interesting outliers on either side.
    Surely someone, somewhere must have done this.”

    I just did it.
    (thx to Mitch above for the data)
    Here’s the link to the graph:
    http://services.alphaworks.ibm.com/manyeyes/view/SThgcEsOtha6p6kKzGIeE2-

    Illustrates what you said very well.
    Italy and Greece stick out very obviously.

    The outliers are the countries with very low corruption, the correlation totally breaks down.

  10. In “The end of poverty”, Jeffrey Sachs does provide a scatterplot with corruption and other economic measures to dispell the myth that African countries are poor because they are corrupt. See page 311 and after.

  11. Hmm, I wonder what has happened to Finnish complacency since the only related headline I’ve spotted from our papers was Corruption Is Still Rife in Finland. It was mainly about how its Finnish version is, indeed, not perceived as corruption -that in such a small country everybody knows everybody and it’s rather acceptable to do favours to your old fishing/hunting buddies. Corruption doesn’t have to involve money. But oh well, if it’s worse elsewhere then I guess we’re the least bad.

    Tackling corrupting is after all very simple:
    a) be small
    b) be homogenous
    c) go local

    It’s not absolutely surprising that Botswana is considered the cleanest in Africa -it’s a land whose borders were not entirely decided by the white man’s pencil and ruler, so they’ve never had too many tribal conflicts.

    And then you can take Switzerland, and its grassroot democracy. The Swiss are diverse folk but have always understood to empower their cantons -which makes the process open and creates social cohesion.

    And finally you have the Nordics, that have typically been both homogenous and decentralised. Being one happy family where the public money goes through strong municipalities and their local councils -that’s how you do it.

  12. The outliers:

    Those that will be high income outliers on almost any GDP vs. whatever plot: Norway, U.S. Luxembourg.

    Those that have higher incomes than other countries with similar CPIs: Greece, Italy.

    Those that have lower incomes than other countries with similar CPIs: Malaysia, Botswana, Chile, Tunisia.

    Now of this last list, Malaysia, Botswana, and Chile, are, or have been, widely publicized the growth markets of their respective regions. But if Tunisia has been called the Maghrebi Tiger, or something like that, I have missed it.

    Another observation: the relationship between perceived corruption and income, so clear below CPIs of seven, seems quite weak above 7. Diminishing returns to honesty? Or are people naturally somewhat dishonest, and forcing them to be even more honest than they are inclined to be demands a very costly enforcement effort?

  13. french swede the rootless vegetable, the CPI numbers you used in your figure (at least according to the textfil) doesn’t seem to fit with the numbers at Transparency International – did you use numbers from an earlier year, or am I missing something?

  14. One thing that stands out with CPI is captured nicely by Doug’s very good overview: No surprises. Doug used that or similar phrases over and over. Indeed, CPI rarely tells us much that we were not expecting. After all, it is based on perceptions.

    Cyrus points us in the right direction by talking about outliers in a correlation of CPI with income. We could do the same thing with other correlates, like various indicators of political system type, historical trajectory (as Doug suggests), etc.

    But in the end I always come back to those “obvious issues with this methodology.”

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