Corruption Bad for Business: Report
Everybody knows corruption is unethical and undermines efficient economic decision making. A recent report tells us just how bad some countries are doing and how large the cost to the economy is.
Corruption takes many forms and is practiced by people that hold power, be it in the public or private sector, for illegal gains, including bribery, misappropriation of public funds, nepotism, and crafting regulations for private gain.
Global corruption results in illegal earnings of between $1 trillion and $1.6 trillion annually according to The World Bank. “Corruption decreases the amount of wealth in a country and lowers the standard of living,” the Washington, D.C., organization states.
Reducing corruption, however, benefits the earnings power of businesses and even the income of nations.
“In many countries, corruption affects people from birth until death,” states the “Global Corruption Barometer 2013” report, published recently by Transparency International (TI).
TI, established in 1993, reports on corruption worldwide. The Global Corruption Barometer (GCB) is a survey of ordinary people’s opinions about corruption in a specific country. Bribing in international business is reported by the Bribe Payers Index. The public sector of each country is ranked and scored in the Corruption Perception Index.
If answers in the survey are missing, a given country will be excluded from the report. Consequently, if a country is missing, it does not mean there is no corruption. Often times the biggest offenders will censor answers and therefore not feature in the report.
Corruption Barometer 2013
TI’s latest publication, the “Global Corruption Barometer 2013,” reports on corruption in 107 countries. The report indicates that global corruption continues unabated and could prevent people from starting a business or buying a home.
A score from 1 to 5 was assigned to each country surveyed, with 1 indicating that there was no corruption in a particular country and 5 being extremely corrupt.
According to the report, the United States has corruption problems. Political parties received a score of 4.1. The country’s best score of 2.9 was assigned to the U.S. military. The media was given a 3.7 score, the police a score of 3.3, and both businesses and public officials and civil servants scored 3.6.
Almost two-thirds of Americans believe that big interest groups govern the United States, while only 5 percent of Norwegians hold that thought about their government. Between 5 and 9.9 percent of U.S. citizens admitted to having paid a bribe last year.
Rwanda, the least corrupt African country, scored 2.1 or less in all categories. Political parties there received a score of 1.2 and the military a 1.1. Public officials and civil servants received a score of 1.7.
More than one-half of the world’s people think that corruption has become worse during the past two years. However, many think they have the power to fight corruption and can make a difference.
China, an Important Global Economy Omitted From Report
China, considered a major economic player, is missing from the “Global Corruption Barometer 2013” altogether.
In the Corruption Perceptions Index 2012, however, China was ranked No. 80 out of 176 countries alongside Serbia and Trinidad and Tobago. It got a score of 39 on a scale of 0-100, “where 0 means that a country is perceived as highly corrupt and 100 means it is perceived as very clean,” according to the report.
TI had asked market research firms in China to send out survey questions. But due to the Chinese regime’s all pervasive censorship, many of the survey questions were deleted, thus invalidating the survey, according to a recent article in the Wall Street Journal.
Corruption in China
“When [China’s] President Xi Jinping calls for a tough response to corruption it’s hailed as innovative policy, but when ordinary people say the same in public, his government regards it as subversion,” said Sophie Richardson, director at the Human Rights Watch, in a recent statement.
To make things worse, the Chinese regime arrested 15 anti-corruption activists in Beijing and Jiangxi Province about three months ago for organizing or participating in demonstrations calling for government officials to make public which assets they own.
The activists are charged with illegal assembly, inciting subversion of state power, disrupting social order, or extortion. The crime of “inciting subversion” could result in a 15-year prison term, while the others carry a 5-year term.
While China is a particularly bad example, the whole world has to continue the fight against corruption. The good news is that the people are willing to take care of the problem.
“Efforts to stop corruption started in earnest in the early 1990s, at a time when [it] was a little-talked-about secret. Twenty years later, the ‘Global Corruption Barometer 2013’ shows that people recognize all too well the extent of the problem and are ready to tackle this issue themselves,” stated the TI Corruption Barometer report.