Table 2.4 The World Bank’s Control of Corruption Index (CCI

Table 2.4 The World Bank’s Control of Corruption Index (CCI)

Some selected countries

Country The World Bank’s CCI (2009)

Australia 2.03 New Zealand 2.38 China −0.53 Indonesia −0.71 Malaysia 0.02 Singapore 2.26 India −0.33 Pakistan −1.10 Bangladesh −1.29 Sri Lanka −0.36 Korea DPR −1.39 Thailand −0.23 Vietnam −0.52 Myanmar −1.75

N.B.: CCI values range between −2.5 and 2.5; higher values represent greater control of corruption. Source: World Bank (2009).

(3) Over a period of 10 years or so, a number of countries, which are poorly ranked in terms of corruption, such as Chile, Costa Rica,

Lithuania and Uruguay, have done very well in reducing levels of corruption, as compared with democracies like Greece and the United

States of America.

ICRG (International Country Risk Guide) Corruption Score by the PRS Group (PRS)i

The International Country Risk Guide has been published on a monthly basis by The PRS Group since 1980. It provides political, economic and financial risk ratings for those countries that are deemed to be important for international business. An index is created for each of the three

categories; the Political Risk index is based on 100 points, while the remaining two are both based on 50 points. The scores are then summed and divided by two in order to obtain the weights for inclusion in the composite country score, where 0–49.9 and 80–100 points denotes Very High Risk and Very Low Risk respectively. One and five-year forecasts are made and projections are based on “best” and “worst” case scenarios.

The Political Risk Rating is made up of several components including a corruption factor. For this component each country is given a value out of 6, where 6 denotes a low risk of corruption. It is believed by the ICRG that potential corruption in forms such as excessive patronage and secret party funding can lead to a large amount of risk for foreign business as it can lead to unrealistic and inefficient controls on the state economy as well as encouraging the growth of the black market.

Political risk information is widely used by major multinational corporations in making decisions about overseas investments. It does not give any measure of the corruption level in a country but specifically measures the risk of investments in industry (sector-wise) in politically volatile vis-à-vis politically stable countries. PRS can actually help a firm or a company to design a risk forecasting system.

The PRS Group research has become very popular over the years. It now covers 140 country reports, which are also grouped into Regional Services.

Opacity Index by PricewaterhouseCoopers (PwC)

The Opacity Index created by PwC in 2001 deals with Corruption, Legal systems, management of the Economy, Accounting transparency and Regulatory opacity (CLEAR). These 5 aspects are combined in the index to provide a measure on the overall transparency of the economic environments of particular countries in their entirety. Surveys were completed by bankers, equity analysts, chief financial officers and PwC in-country practitioners and are compiled into what is called an O-Factor (Lipsey, 2001).

Since then, the Kurtzman Group has expanded the index, rejecting the idea of using surveys to collate information due to the belief that business leaders were unable to compare international business practices with their own due to the lack of knowledge of foreign counterparts. Instead, data is collected from sources such as the Global Competitiveness Report and the Index of Economic Freedom to determine how well a country’s legal