transparency International’s (TI) corruption Perception Index (CPI), is one of the most widely used indicators of Corruption worldwide, however, amassed a fair share of critics since its establishment of such an index. TI’s NGO approach cannot tell the full story, it has devised a mechanism based on public sector perceived Corruption as a yardstick to arrive at the ranking of a country. A country’s political scenario sets the tone for the public and private sector. If the political actions can define a country’s future, then why can is it not sufficient to measure a country’s perceived Corruption rate?

The beginning

Dishonest behavior manifests itself in many ways, from accepting bribes and inappropriate gifts, manipulating elections, double dealing, money laundering, rent seeking, defrauding investors to under the table financial deals. An investment manager running a Ponzi scheme would be a very good example of Corruption.

The Corruption Perception Index

Transparency International (TI) is the well-known organization that published the Corruption Perceptions Index (CPI) since 1995, annually ranking countries "by their perceived levels of Corruption, as determined by expert assessments and opinion surveys."

The interesting words are “perception and perceived.” One has to take them as observations because Transparency International’s methodology arises out of a wide variety of sources that provide a perception of country experts and business people of the level of Corruption.

TI ranks the countries from a score of 0 (extremely corrupt) to 100 (extremely clean).

However, whatever said and done, they are still a barometer of measuring Corruption across the countries. The 2015 stats suggests that Nordic countries such as Denmark, Finland, and Sweden — have the cleanest public sectors while countries such as Afghanistan, North Korea, and Somalia rank at the bottom-most layer of transparency and ethical movement.

Gone are the days when the economies used to be calculated based on previous data, forecast and various other factors including a weightage to the ever-changing political environment. However, today, Corruption is a direct product of the political environment in a country and the political ripple effect of its neighboring countries.

For instance, Australia and New Zealand being the two countries secluded in the Pacific Ocean does not feel the ripple effect of its neighbors political scenarios such as a lot of Asian countries or the African states such as Sudan, Ethiopia, Somalia which are troubled by each other's political environment. Definitely, one has to raise their hats to the policy makers in Australia who have developed a robust anti-fraud framework.

Is there more than what meets the eye?

TIs scoring system has undergone a lot of academic debate and thus become controversial in recent years leading to a number of problems with the definition, perception biases, and the like. One of the examples being they utilize the standard deviation and mean which are usually taken from the last CPI measurements, and the rescaled scores are compared against that year in turn giving rise to the confidence interval, which naturally has an error percentage associated with the same.

Besides this, the CPI does not take into account

  • Private sector
  • Landmark events and fines such as the Libor scandal in Britain, Euribor incident of the banking giants in Europe or the VW emissions scandal in the United States.

Thus, TI doesn’t claim that their index measures Corruption as a whole point, but rather measures “perceptions” of Corruption.

Whatever said and done

Irrespective of its strengths, weakness, fan following or critics, TI remains as one of the elements of the fight against Corruption. It has instigated the world to think and raise questions and maybe, just maybe, that is the role TI is supposed to play in the bigger picture while the lawmakers /policy makers need to ink their pens to fill the rest of the canvas for the fight against Corruption.

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