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Measuring Corruption: a Comparison Between the Transparency International's Corruption Perceptions Index and the World Bank's Worldwide Governance Indicators

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Measuring Corruption: a Comparison Between the Transparency International's Corruption Perceptions Index and the World Bank's Worldwide Governance Indicators A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Rohwer, Anja Article Measuring Corruption: A Comparison between the Transparency International's Corruption Perceptions Index and the World Bank's Worldwide Governance Indicators CESifo DICE Report Provided in Cooperation with: Ifo Institute – Leibniz Institute for Economic Research at the University of Munich Suggested Citation: Rohwer, Anja (2009) : Measuring Corruption: A Comparison between the Transparency International's Corruption Perceptions Index and the World Bank's Worldwide Governance Indicators, CESifo DICE Report, ISSN 1613-6373, ifo Institut für Wirtschaftsforschung an der Universität München, München, Vol. 07, Iss. 3, pp. 42-52 This Version is available at: http://hdl.handle.net/10419/166975 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu Research Reports MEASURING CORRUPTION:A dicators, focusing especially on CPI and WGI, over time. The CPI and the WGI are both composite in- COMPARISON BETWEEN THE dicators, made up of distinct component data TRANSPARENCY INTERNA- sources that assess a wide and differing range of corruption (UNDP 2008, 6; Knack 2006, 15). TIONAL’S CORRUPTION PER- CEPTIONS INDEX AND THE The many faces of corruption WORLD BANK’S WORLDWIDE GOVERNANCE INDICATORS Corruption occurs basically in four main forms: bribery, embezzlement, fraud and extortion (Andvig et al. 2000, 14ff.): ANJA ROHWER* • Bribery is understood as the payment (in money or kind) that is given or taken in a corrupt rela- tionship. Equivalent terms to bribery include, for Introduction example, kickbacks, commercial arrangements or pay-offs. These are all notions of corruption in Corruption is a complex social, political and eco- terms of the money or favours paid to employees nomic phenomenon that is prevalent in all countries in private enterprises, public officials and politi- in varying degrees. There is no international con- cians.They are payments or returns needed or de- sensus on the meaning of corruption. In the litera- manded to make things pass more swiftly,smooth- ture, corruption is commonly defined as the misuse of public power for private benefit (Lambsdorff ly or more favourably through state or govern- 2007, 16). Although this definition has been widely ment bureaucracies. adopted, several critics have observed that such a • Embezzlement is theft of resources by people who definition is culturally biased and excessively nar- are responsible for administering them, e.g., when row (UNDP 2008, 12). disloyal employees steal from their employers. It is not considered corruption from a strictly legal point The crucial question is: is it possible to measure cor- of view, but is included in a broader definition. ruption, and if so, how? Corruption is a variable that • Fraud is an economic crime that involves some cannot be measured directly. However, the number kind of trickery, swindle or deceit. It involves ma- of indices focused on corruption measurement has nipulation or distortion of information, facts and grown exponentially over the past decade. They expertise by public officials for their own profit. range from some of the more established and wide- • Extortion is money and other resources extracted ly used indicators like Transparency International’s by the use of coercion, violence or threats to use (TI) Corruption Perceptions Index (CPI) and the force. World Bank’s Worldwide Governance Indicators (WGI), to a newer generation of measurement and Another popular way to differentiate various forms assessment tools like TI’s Global Corruption of corruption is by dividing it into petty and grand Barometer and Global Integrity’s Global Integrity corruption. On the one hand, petty corruption is de- Index. This article will discuss different ways to fined as street level, everyday corruption. It occurs measure corruption and compare the different in- when citizens interact with low- to mid-level public officials in places like hospitals, schools, police de- partments and other bureaucratic agencies. The scale of monetary transaction involved is small and * Ifo Institute for Economic Research at the University of Munich. E-mail: [email protected]. primarily impacts individuals (and disproportion- CESifo DICE Report 3/2009 42 Research Reports ably the poor; UNDP 2008, 8). On the other hand, with corruption, i.e. whether they have been offered grand corruption takes place at the policy formula- or given a bribe. tion end of politics. It refers not so much to the amount of money involved as to the level at which Indicators based on a single data source are produced it occurs (where policies and rules may be unjustly by the publishing organisation without recourse to influenced). The kinds of transactions that attract third-party data whereas composite indicators aggre- grand corruption are usually large in scale. Grand gate and synthesize different measures generated by corruption is sometimes used synonymously with various third-party data sources.1 political corruption (U4 – Anti-Corruption Re- source Center, Glossary). Proxy indicators2 try to measure corruption indirect- ly by aggregating as many opinions (or voices) and signals of corruption, or by measuring the opposite: Different methods for corruption measures anti-corruption, good governance and public ac- countability mechanisms. It is important to remember that there is no inter- national consensus on the meaning of corruption. The question now is what these indicators really mea- This ambiguity has direct implications on interna- sure.Because there are so many different forms of cor- tional rankings. And because of the many different ruption, it is not possible for one indicator to capture faces of corruption and its very nature, it is almost the multidimensional aspect of corruption in a reliable impossible to deliver a precise and objective mea- and objective manner.Roughly speaking,all indicators sure for the phenomenon. Objective data on cor- of corruption are necessarily biased towards a specific ruption are difficult to obtain, and there is still no dimension of corruption. For example, the World measurement system constructed that accurately Bank’s Control of Corruption indicator measures cor- accounts for actual levels of corruption within a ruption in the public and private sector; hence, this in- country and, by extension, at the global level. This dicator goes beyond the commonly accepted definition of corruption. The Transparency International’s Cor- is because specific measures of corruption are im- ruption Perception Index measures corruption only in perfectly related to overall levels of corruption. In the public sector.To create an international corruption other words, current indicators are imperfect prox- ranking system, it is essential to find an international ies for actual levels of corruption. consensus on what corruption is. Generally, no single indicator can capture the full complexity of the phe- In recent years, however, corruption has been mea- nomenon.As a result it is more valuable to use a com- sured at the regional, national and global level, bination of tools rather than single indicators. mostly using perception surveys as the leading me- thod to collect data. Indicators have proved very useful in raising awareness, making cross-country Corruption indices comparisons and conducting statistical analysis, helping establish correlations between corruption This section provides an overview of selected inter- and a wide range of variables (U4 – Anti-Corruption national corruption indices. We can distinguish be- Resource Center 2009, 2). tween cross-country indicators of levels of corruption and cross-country assessments of anti-corruption We can distinguish between the following types of frameworks. Both the Transparency International’s corruption indicators (UNDP 2008, 8 ff.): Corruption Perceptions Index and the World Bank’s Worldwide Governance Indicators (including • Perception-based indicators and experience-based Control of Corruption) belong to the former catego- indicators ry. For more information about international corrup- • Indicators based on a single data source and com- tion indices, see UNDP (2008), which gives an posite indicators overview of more indices and tries to identify the dif- • Proxy indicators. ferent advantages of these indices. Perception-based indicators are based on the opin- ions and perceptions of corruption in a given country 1 Composition indicators
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