Trade News: On the Global Corruption Index by Transparency International & Euromonitor

A report by Transparency International (The Global Coalition Against Corruption) says Britain has dropped in the league table of countries perceived to be cleanest in world.  Read the article in the Guardian. An Interactive map displaying global corruption is available at the Transparency web site. There is also a different version on global development available from The Guardian web site.  This effort is supported by the Bill and Melinda Gates foundation. You can view a larger size of the corruption listing by clicking on the list below.

From Euromonitor: Special Report: The Impact of Corruption.  The global level of corruption, which includes bribery, fraud and embezzlement, is impossible to quantify but appears to be increasing in 2011. Corrupt practices affect all countries, though are most obvious and pervasive in developing countries, with war-torn and unstable states the worst-affected. Governments and international bodies are making efforts to fight the problem, but corruption will continue to impact businesses and consumers both in developed and developing countries.

Economic impact

Corruption has a huge impact on the economy and business environment:

• By increasing the size of the ‘grey’ or informal economy, corruption reduces government revenue because many transactions remain outside the formal taxation system. In 2010, the Kenyan government said it estimated that up to one-third of its national budget was being lost to corruption every year.

• Systems of nepotism and bribery often place unqualified officials in charge of decision-making on public sector spending and policy. This leads to mismanagement and further opportunities for the system to perpetuate itself. Commodity-rich countries in developing regions are also more susceptible to corruption due to a combination of significant state wealth combined with often poor standards of governance and legislation.

• Corruption can discourage foreign investors because it affects the efficiency and competitiveness of the business environment. However, there is no direct correlation between the two: Russia received US$38.7 billion in Foreign Direct Investment (FDI) inflows in 2009 even though it was rated 154th out of 178 countries in the CPI in 2010, while Nigeria received the highest FDI in sub-Saharan Africa in 2009 at US$5.9 billion, but is rated 134th on the CPI.

• Many foreign companies are prepared to risk engaging in corrupt practices in developing countries (especially those rich in natural resources) given the financial rewards involved.

An updated version of the Corruption Index (for 2011) is available from Euromonitor.