Examining Corruption & Technology

Good government makes for wealthy countries. This may seem to be self-evident, but is it true?

One way to address the question is to look at the Corruption Perceptions Index, produced by Transparency International, and which we incorporate into our algorithm in the research we’ve been doing for the past two years.

The Corruption Perceptions index, like any measure, is controversial, in this case because it measures only the perception of something that would be difficult to measure rationally in any case.

But perception is often reality, and corruption, like porn, is something that you know when you see it.

There is a chicken-and-egg problem: does corruption cause poverty, or does poverty cause corruption? And are there examples of countries which are relatively wealthy but rated as corrupt? Are there any poor countries rated as not corrupt?

Of the top 20 highest-income nations among the 99 we’ve surveyed, 15 rate a 7.5 or higher on Transparency International’s 10-point scale. The exceptions are two oil-rich nations (Kuwait and the UAE), the United States, France, and Italy, the latter at a lowly 3.9.

The developing, hot-growth economies do not rate well. Take the BRICS, please: Brazil (3.8), China (3.6), India (3.1), and Russia (2.4). Russia maintains the highest income in this group, although it could be argued that it remains a declining superpower rather than an emerging economy. There’s also plenty of discussion in the world about how China’s Communist dictatorship remains (allegedly) less corrupt than India, the world’s largest democracy.

Other hot-growth countries fare poorly in this CPI, including Indonesia (3.0), Vietnam (2.9), the Philippines (2.6), and Nigeria (2.4), all of which have per-person incomes raning from 3% to 7% of the United States. Some emerging countries do better, including Lithuania (4.8) and Jordan (4.5).

Chile (7.1), Uruguay (7.0), and Estonia (6.8) are the only developing nations with respectable CPIs. An odd case is found in South Korea, which is somewhere between a developing and developed nation and has a mediocre CPI (5.4).

Our research focuses primarily on Internet access and bandwidth, data servers, income disparity, and local cost-of-living. The CPI is an additional ingredient. South Korea and Estonia lead the current rankings. Vietnam ranks #9, and Bulgaria (3.3) comes in at #17. The rest of the Top 20 are well-developed nations with high CPIs.

When we examine the technological factors only, removing CPI and other societal factors from the algorithm, we find a Top 15 that has a very high correlation with very poor Corruption Perceptions. Romania (3.6) and Morocco (3.4) are the “leaders” in this group.

The correlated CPIs do rise dramatically in the next group of 15. But it’s clear that corruption is not a highly mitigating factor when it comes to technology-driven economic development, nor does it seem to be an enormous hindrance to the global investment community. An argument could be made that societies become less corrupt as they progress, and in the modern era of technology-driven transparency, will do so more quickly.

Certainly my experience living in Southeast Asia and traveling the region showed many societal and bright spots in countries that do not fare so well in the CPI. In my view, where there’s a nicely developing technology infrastructure, there’s hope.

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