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Corruption Index today, Development Aid Reform tomorrow?
By Kaufmann | November 18, 2009 3 Comments »
Transparency International (TI), the international anti-corruption NGO, just released its annual corruption perceptions index (CPI). No big surprises. This is no surprise. Corruption does not tend to change dramatically from one year to the next. Yet it is certainly worth reviewing the new data…
Before so doing, a warning: governance indices (including those we are associated with) are not highly accurate. Therefore, precise rankings are misleading. There is a need to be transparent and precise about the extent of imprecision in each index, as well as the implications of such imprecision for comparisons across countries and over time…
When differences between two countries are large (or the change for the same country over an 8-year period is substantial), and such change is informed by many independent sources, one can have confidence that those differences are meaningful. Small differences in ranks or ratings imply that the two countries being compared are in a ’statistical tie’. Yet there is such large variation in anti-corruption performance across countries, that there are many comparisons that can be made with high confidence — without pretending precision in rankings.
New Zealand, Denmark, Singapore, Sweden, Switzerland and Finland are at the top. Comparisons among themselves, or trying to ‘anoint a ‘No. 1′ would be silly hair-splitting. Yet one can suggest that any country in that top group does perform better than the US or France, for instance, both of which cannot be meaningfully distinguished from each other (or from Chile, for that matter…).
On the other end of the spectrum one finds well over a dozen countries regarded by the TI index as rife with corruption, including Afghanistan, Iraq, Sudan, Chad, Somalia, Myanmar (Burma), Equatorial Guinea, Venezuela, Haiti, Turkmenistan and Uzbekistan. Conflict is rife in some, authoritarianism and extractive industries in others.
Focusing on the group of countries that are performing very poorly on corruption, which include other dozens in addition to those listed above as well, may spur further debate about aid effectiveness. This could be healthy. In fact, right now in the US there are now at least three major efforts underway to review that country’s official foreign aid strategy and programs, one from the White House, another from the State Department, and yet another in the US Congress. Indicators are key to evidence-driven policy making.
Looking at the indices on corruption, it is simple to see that countries where the US has channeled large amounts of development aid, such as Iraq, Afghanistan, Sudan and Pakistan, and to a large extent Nigeria, Egypt and Kenya, are not faring well on corruption.
It would be equally simple to rationalize pulling back from development aid. That would be simplistic and misguided, for the US, or for other bilateral or multilateral donor agency. Yet business as usual in development aid is not an option. [Actually, I stand corrected; continuing old practices of funneling funds seems to be the only 'option' being on the table in some aid agencies nowadays...]
It is critical to probe below the surface and ask tough questions, like these ones for starters:
1. Even if there are high levels of corruption in the country when the US (or other donors) provide massive aid, is there evidence that improvements are taking place, and that there is a reformist leadership (not just in central government) committed to future changes — so that there is a likelihood of sustained movement in the right direction? In other words, let us not focus on mere levels of corruption, even if dire.
2. Aren’t there some cases of significant aid flowing to countries where there is no endemic corruption, and what can one learn from these? The focus on the Iraqs, Afghanistans and Pakistans can blindside one to the fact that there different country cases as well. Colombia has been a large recipient of development aid, and over the past decade there have been notable improvements in controlling corruption. Then in Ethiopia corruption is not endemic, another relatively large aid recipient. Of course both countries feature other challenges (to different degrees), such as in the democratic accountability and human rights front. Liberia, through resolute leadership, provides another potentially interesting case study in improvement in the short term.
3. Are the programs funds being provided by the aid program actually helping promote improved governance and anti-corruption in meaningful way, with full country leadership and partnership? Or are they perpetuating corrupt governments, leaders and institutions? Or are they simply being wasted and not making a difference (while they could be making a big difference somewhere else)?
4. Where the public leadership and central government is entrenched and highly corrupt, what alternatives to working with central governments can be deepened? What has worked, and what has not?
5. What is the exposure to corruption in the very projects and funds provided by development aid? [This is a well known concern, and a relevant one, although often concentrating solely on this fiduciary issue has meant ignoring the all-important development effectiveness concern in the previous four sets of questions].
Needless to say, corruption cannot be the only lens by which aid effectiveness needs to assessed. It is often a symptom of broader governance failures. Nonetheless, a likely conclusion from a serious review of development effectiveness if governance and corruption are taken head on would be that further selectivity in aid programs may be needed. Yet the devil will be in the details. And in the polity.
Further consistency in applying criteria for helping countries is also sorely needed, even if imperfectly. The treatment of similarly corrupt governments by official donor agencies tends to be very different depending on geo-oil-politics, undermining credibility and impact. This is just for starters, and was also part of an interesting exchange today with a journalist of Sphere/AOL News, here. And this story in today’s NYT on the politics of corruption between the US and Equatorial Guinea is very telling.
Plenty of work ahead.
Topics: Aid Effectiveness, Corruption, Measurement Frontiers, Public Financial Management, Rule of Law, Transparency, Voice and Human Rights | | 3 Comments
November 22nd, 2009 at 2:24 am
Thanks for your work on setting up the indicators. I’m now doing a paper on applying data mining techniques to the indicators fused with the the Human Development Index. :)
January 24th, 2010 at 10:46 am
I have attended your “core course on governance, Brussels” in 2004 with excitement.
My frustration is that the indicators of corruption might be technical correct, the real policy in daily live for the developing countries is so differently and not to be controlled by aiding countries or NOG’s alone. Countries tend to contribute if the can also benefit from their own aid, more business wise.
What about developing indicators that can describe or can predict that (business) opportunities aspect. Like, reduce of treat indicators, possible oil export indicator, possible positive exposure (marketing), possible ect…
Sadly, I think that countries are willing to help an other country not sole to reduce poverty or decrease corruption. Therefore i think that providing other indicators could also be helpful to predict the growth of human welfare.
Don’t you think so?
PS loved your courses.
January 27th, 2010 at 1:33 pm
Eric,
your comment is much appreciated, as is you recalling our collaboration in the governance core course in Brussels years ago! Indeed, the destiny of each country should be in the hands of their own people, and not by any outside donor. Part of the problem is that many official donors are still obsessed with channeling funds and working through high level officials in central government. These are at times ineffective at best, or corrupt and unrepresentative of the people and communities, at worst. In terms of indicators, first, the aggregate governance indicators we (WGI) and others (TI, IIAG, etc.) provide cover many some of the broader dimensions you and investors are interested in, and then, second, in the website http://www.govindicators.org you can also access to the hundreds of disaggregated indicators we use for the composite ones. Many of the disaggregate indicators do capture very specific dimensions of what you are interested in.