Perceptions of corruption in emerging economies persist

In a series of blog posts curated by the World Economic Forum’s Partnering Against Corruption Initiative (PACI), a number of leading voices will present their perspectives on anti-corruption in the run-up to World Anti-Corruption Day on 9 December. In the following post, Susan Côté-Freeman, Programme Manager, Private Sector Programmes, at Transparency International, explains Transparency International’s Corruption Perceptions Index 2012.

Corruption is the world’s most talked about global problem according to a survey commissioned by the BBC. It’s up there with other seemingly intractable problems like poverty and unemployment.

Transparency International’s Corruption Perceptions Index 2012 – which measures the perceived levels of public sector corruption in 176 countries and territories – is not likely to put an end to discussions on the topic. The index has become an essential tool for policy-makers, activists and the many businesses that use it to develop their anti-corruption risk management systems.

Corruption Perceptions Index: ranking highlights

What is noteworthy about this year’s index? Denmark, Finland and New Zealand tie for first place while Afghanistan, North Korea and Somalia once again cling to the bottom rung (read about the top and bottom ranked countries here). What is more dismaying, however, is that two-thirds of the countries ranked in the index score below 50 on a scale from 0 (perceived to be highly corrupt) to 100 (perceived to be very clean).

What do this year’s rankings mean for governments? They need to take a stronger stance on governance, including the introduction of more stringent rules on lobbying and political financing, making public spending and contracting more transparent and ensuring that public bodies are more accountable to citizens.

And what should business take away from this year’s index? Transparency International’s message on corruption is clear: corruption can happen anywhere and no country and no company can afford to be complacent. But in looking at the bottom two-thirds of the rankings, it’s clear that the major emerging economies, where so much of today’s economic activity is taking place, continue to be seen as highly corrupt.

How do the BRICS perform?

This year’s rankings for the BRICS economies show Brazil and South Africa tied for 69th place, China at 80, India at 94 and Russia trailing the group at 133. All but one of the world’s 10 fastest growing economies score less than 40 out of 100.

It is estimated that the BRICS have contributed up to 50% of global economic growth over the last decade. It therefore stands to reason that growing emerging economies are attractive for business looking for new markets. But unless persistent corruption is addressed, it will continue to present high risks for foreign investors and for emerging economies, which could see their growth stunted by failure to confront problems like bribery.

Companies also need to be more transparent. Our research shows that while the world’s 105 biggest multinationals are doing more to report on their anti-corruption programmes,  but they are not doing so well when it comes to reporting country-by-country. The BRICS all have more than 60 of those 105 companies operating in their borders, but in none of them do more than a dozen of the companies disclose their revenues and/or taxes paid in the country on their corporate website (for more details, click here).

Tackling corruption is a challenging and complex task. But it is critical for all of us, whether we are in emerging or more advanced economies, to defeat corruption, thus ensuring that governments gain and maintain the trust of citizens and business can thrive in a competitive environment that is open and fair.

Author: Susan Côté-Freeman is Programme Manager, Private Sector Programmes, at Transparency International.

The opinions expressed here are those of the author, not necessarily those of the World Economic Forum. 

Image: Image of a hand arranging a puzzle. REUTERS/Yuriko Nakao