PHA-Exchange> Transparency International Corruption Perceptions Index is out today

[Claudio]

From: RKoppenleitner at t-online.de 

The Transparency International Corruption Perceptions Index is out today

(8:30 GMT). The complete data and explanatory material is available at      



                             http://www.ICGG.org  



Passau University, 18 October 2005:  The new CPI index is out today: and

judging from history, there will soon be a wave of international

anti-corruption investigations based on its work.  



In the past ten years the CPI has caused over ninety high-profile

investigations around the world.  The unequivocal message from these

investigations: corruption is disastrous to societies.  The very people who

deserve our help are the most victimized: the honest, the poor and the

powerless. The honest are deprived because they do not participate in the

shady deals; the poor are worse off because they cannot afford the costly

bribes; the powerless are victimized because they cannot escape the

extortionate demands of a greedy environment. 



The CPI has become an important tool in fighting corruption.  It has placed

the fight against corruption firmly on the public agenda.  It has helped

spark major legislative reform.  And it has helped change the popular

perception that corruption was always "someone else's problem": Firms point

to politicians as causing corruption; politicians mention unscrupulous

private interests as being at the core of the problem; rich countries

delegate responsibility to corrupt leaders of less developed countries; for

poor countries the problem rests with bribe-willing multinationals. By

putting countries in an integrity-league the CPI provides a simple

sports-like logic. Whatever one may think about other countries in the

league, one's home country is placed in a sequence of countries rather than

being on top by force of xenophobic prejudice. 



International investors also dislike countries perceived to be corrupt,

fearing arbitrary decision making and a poor protection of their property.

Countries with a higher score in the CPI, to the contrary, suffer less from

capital flight and are preferred as safe havens. According to recent

research, if a country were to improve its score in the CPI by 1 point (out

of 10), foreign direct investment would increase by 15 percent.



Here is the bad news:  the following countries, some of them very

high-income, have deteriorated in the CPI since 1995. A reduction in the

score (in descending order of significance) was observed in Poland,

Argentina, Philippines, Zimbabwe, Canada, Indonesia, Ireland, Malaysia,

Israel, Slovenia, Czech Republic, United Kingdom and Venezuela.



Prosperity is no guarantee against corruption. This is best seen in the

oil-rich countries, scoring poorly in the CPI. For example, this year, for

the first time, Equatorial Guinea enters the index. Its recent boom in oil

extraction contrasts to its 152 position in the CPI, one of the lowest this

year. This underpins that high income from natural resources produces ample

opportunities for corruption, rather than helping development.



But there is hope. Corruption is not a fate. It prospers where business,

society and politics turn a blind eye to its damaging effects. 



Here is the good news; countries can improve their ranking in the CPI. They

can "compete for integrity".  The South Korea government had announced its

goal to belong to the top-ten countries in the CPI.  They improved their

ranking from 47 in 2004 to 40 this year. This is one of the starkest

improvements - and evidence that the right type of competition has been

initiated by the CPI. 



There are other signs of positive change, recent research at the University

of Passau indicates significant improvements between 1995 and 2005 occurred

(in descending order of significance) in Estonia, Italy, Spain, Colombia,

Finland, Bulgaria, Hong Kong, Australia, Taiwan, Iceland, Austria, Mexico,

New Zealand and Germany. 



These are the places to look at when seeking good precedent. Given the

international attention and support given to anti-corruption programs, the

prospects of a sustainable reduction of corruption are higher than ever.

Some poorer countries in the CPI are already indicative that poverty need

no longer place a country in a downward spiral. Countries such as Chile,

Barbados, Uruguay, Jordan and Botswana score rather well in this year's

index. They are also prime candidates for improved economic and social

development 



In a recent study two authors, Lee and Ng, show that firms from countries

scoring badly in the CPI are valued lower by international investors. If a

country improves by 1 point in the CPI, the valuation of stocks of its

domestic firms increases by roughly 10 percent. This illustrates that

fighting corruption is not only a moral obligation - it is increasingly

part of good business.



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