The new Transparency International’s 2006 Corruption Perceptions Index is out. This year’s index focuses on linkages between poverty levels and corruption. Also, as the press release notes, corruption is often part of a complex system of relationships and intermediaries:
The weak performance of many countries indicates that the facilitators of corruption continue to assist political elites to launder, store and otherwise profit from unjustly acquired wealth, which often includes looted state assets. The presence of willing intermediaries – who are often trained in or who operate from leading economies — encourages corruption; it means the corrupt know there will be a banker, accountant, lawyer or other specialist ready to help them generate, move or store their illicit income.
Kenya’s Anglo-Leasing and related scandals presents a case in point, where the misappropriation of public funds was enabled through fraudulent contracts using sophisticated shell companies and bank accounts in European and off-shore jurisdictions, according to John Githongo, Kenya’s former anti-corruption tsar. And according to TI Kenya’s Kenya Bribery Index, bribery costs Kenyans about US $1 billion each year, yet more than half live on less than US $2 per day.
How useful is CPI in making policy decisions? A new OECD publication, Uses and Abuses of Governance Indicators, takes a closer look at CPI and some other popular governance indicators and evaluates their usefulness. In regards to the Index published by TI the authors note that:
While Transparency International clearly asserts that the CPI is a ranking and cannot be used as a measure of national performance in the fight against corruption (Galtung, 2005), it is often (mis)interpreted by newspapers, and sometimes (mis)used by donors, as precisely such a measure. The reason why the CPI is not a measure of corruption – and cannot reliably be used as a basis for aid-allocation decisions – is because year to year changes both in its methodology and in the list of countries it covers mean that it does not discriminate reliably either (a) among countries with scores close to each other, or (b) between conditions of corruption, even in the same country, over time. Nor should it be forgotten that more than 50 countries, including many that are undoubtedly plagued by severe corruption, are not ranked on the CPI.
Published Date: November 06, 2006