Perceptions of Corruption

Transparency International produces a much cited index of corruption, the Corruption Perceptions Index (CPI).  But here is something, shall we say… interesting.

"Transparency International commissions the CPI from Johann Graf Lambsdorff." Lambsdorff, who likes to be called the "father" of the CPI, has another kid on the side, a firm called Anti-Corruption Training and Consulting.  And what does this firm do?  Well I will let them speak for themselves:

Following an invitation of the Chinese Ministry of Supervsion Prof.
Graf Lambsdorff and Mathias Nell went to China from July 22 to July 29
2007. The trip encompassed anti-corruption consultations in Beijing,
Nanjing and Chengdu as well as the release ceremony at Tsinghua
University of the Chinese version of Prof. Graf Lambsdorff’s new book
“The Institutional Economics of Corruption and Reform: Theory, Evidence
and Policy”.

China, let us recall, scores a 3.5 out of 10 on TI’s Corruption Index where the most corrupt country in the world, Somalia, has a score of 1.4.  Pretty corrupt, eh?  Here is a picture, from the ACTC website illustrating some of ACTC’s consulting:

Actc

Hat tip to CPI-Watch.

Comments

Ratings agencies and CDOs all over again. Different players, same results.

What really suprises me is that numerous econ papers actually use all these CPI scores for calculating stuff.

You might also be interested in this research from two Wharton professors that were able to replicate the TI rankings by running a series of web searches and recording how many documents contained the word "corruption" within the same paragraph as a country’s name. The corresponding ranking very closely mirrored Transparency International’s corruption rankings.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=990021
http://knowledge.wharton.upenn.edu/article.cfm?articleid=1786

Crazy world where a numerical ranking would be worth spending $ to influence.
Don't doubt it is, though.

What is your point Alex? Do you think a typical photo of a typical meeting with Chinese officials means anything? Would it be better if they didn't try to meet with officials? Unless you can convince me that boycott-mode is the only solution, I'd be as happy as the next man to declare that China is generally opague and corrupt, but this is a pathetic means of trying to convey this point. Seriously. This blog certainly has seen better days.

CW needs to read the post more closely. Hint: the post isn't about China.

I agree that there is a conflict of interest here... that said, not obvious which way it goes. On the one hand TI has the incentive to portray its clients in a positive light; on the other hand, it may have an incentive to portrary corruption as being worse than it really is in order to generate demand for its services.

I don't understand Alex's point: "China, let us recall, scores a 3.5 out of 10 on TI's Corruption Index where the most corrupt country in the world, Somalia, has a score of 1.4. Pretty corrupt, eh? Here is a picture, from the ACTC website illustrating some of ACTC's consulting..."

I don't have any qualitative problem with those numbers -- what was Alex's point?

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Checking whether Google is awake more likely.

I just participated in the Economics of corruption in Passau, a workshop led by Prof. Lambsdorf, and this discussion is very timely.

It's obvious from the original post that there is a conflict of interest, but some people appear to be mixing up Lambsdorf (who is a professor and consultant to TI and ACTC) with TI itself. I wonder if TI knows about Lambsdorf's activities?

Second, there are a number of reasons that the perceptions index should NOT be used. The biggest one -- as Lambsdorf says -- is that it's invalid for panel regressions. (It's debatable whether it's useful for cross country regressions; I think not.) For those seeking alternatives, I suggest some objective, cross-country surveys of actual bribes taken, TI's bribe payer's survey or the WB's Doing Business surveys.

As far as China's incentives are concerned, be VERY CLEAR that the corruption survey does impact business investment decisions. Given that the Party does business as well as politics, note the strong incentives for them to improve the PERCEPTION of corruption. (Actual corruption is another matter.)

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