Corruption Perceptions Index

The Corruption Perceptions Index (CPI) is an index measuring the level of corruption that exists in the public sector across the globe. It is a renowned global index with over 180 countries under its watch and is based on the perception of global experts and business entities. The index is based on both scores and ranks.

The CPI index holds a vast significance because it combines different data and reports, including manifestations of corruption, into one world-based comparable indicator. The index is published annually by Transparency International. The index offers a comprehensive image of the level of corruption in a particular country.

Corruption Perception Index is a leading corruption indicator in the world. It comprises 180 countries and territories, which are ranked based on the scores assigned to them. The index is published and updated annually by Transparency International, which is a German-registered association; it was founded in 1993 by former employees of the World Bank. The corruption is measured on a scale of 0 to 100. The higher the score of a country, the less corruption is denoted, and likewise, the country is ranked in the index. The ranking, however, is relative to other countries' positions and other socio-political data and factors. It also means that two or more countries can share the same ranking in the index. The list is based on the perceived levels of corruption that exist in the public sector of any country. It is based on feedback and surveys from critically designed questionnaires and responses from world experts and business people.

A series of corruption categories are included and measured by the CPI. Still, it does not cover illicit financial flows, tax frauds, enablers of corruption, citizen's direction perception or corruption experiences, money laundering, informal economies, and markets. As per 2023 CPI data, over two-thirds of countries score below 50 out of 100. It is a strong indication that the world has a severe corruption problem. The global average is stuck at 43. The Corruption Perceptions Index is an essential global indicator; countries listed on it strive to maintain their good positions and, at the same time, make internal changes, introduce new programs, and set good examples to uplift their ranking position and score better.

The process of the Corruption Perceptions Index contains four steps -

1. Selection of source data - Since 2012, CPI has taken data sources from 13 different assessments and surveys from 12 different institutions, which are -

 Global Insight (US)

Economist Intelligence Unit (UK)

African Development Bank

Bertelsmann Foundation (Germany)

World Bank

World Justice Project (US)

International Institute for Management Development (Switzerland)

The PRS Group (US)

Freedom House (US)

Political and Economic Risk Consultancy (Hong Kong)

World Economic Forum

Transparency International is the 12th institution itself.

2. Rescaling source data - The data is quantified to fit into the scale. The mean and standard deviation for each data source based on the data from the reference year, which is 2012, are calculated.

3. Aggregating the rescaled data- The resulting index score for each country is determined as a simple average of all its rescaled scores available. This process is performed for standardization and is not used as a score to derive the index.

4. Reporting - Every CPI score comes along with a confidence interval and standard error to represent the variation present within the data sources. Ultimately, the CPI index is reported and published.

The list of corruptions measured by the CPI is -

• Bribery and favors are given to officials to get work done in government offices and the public sector.
• Diversion of public funds and utilizing it for personal interest and profit.
• The CPI also includes the corruption practices of officials using their public offices for personal work and agendas without facing the consequences.
• The corruption is observed as state capture by narrow vested interests.
• Illegal access to information on government activities and public affairs and then using it for personal gain.
• Cronyism, favoritism, and nepotism in hiring and appointment in the civil services.
• Excessive use of red tape in the public sector increases corruption practices.
• The ability of the government to contain corruption and casual behavior, taking rules for granted, especially in the public sector.
• Electoral frauds, the economics of corruption, Mafia states, influence peddling, and kleptocracy.

Here are some hypothetical and real-world examples to help one understand the concept better.

Example #1

Suppose a fictitious territory; the whole place is plagued with corruption and illegal activities. Every public sector official takes bribes, breaks the code of conduct, manipulates funds, and takes unfair advantage of their positions in office. Those who are at the top only select people they know and family members for new recruitment and appointments in civil services. Government contracts and tenders are misappropriated and managed with no regard for laws and regulations.

Such a nation will have an abysmal score in the Corruption Perceptions Index (CPI) and will rank very low. The data about the territory will be collected from central global authorities, and experts and businesspeople will conduct surveys. It is a simple CPI example. However, if the country notices its position in the index, it can introduce reforms and practice fair and rightful methods to strive for a better position and score in the index.

Example #2

According to an article, the US needed to improve its position in the corruption perception index by showing slight improvement and less care towards fighting corruption in the nation. As per the 2023 CPI report published in January 2024, the US scored 69 out of 100 with a rank of 24 out of 180 countries and territories.

The United States had the same score in 2022 and only made a two-point improvement compared to 2020 and 2021. However, the US did stand out in judicial independence. The country achieved its highest score in 2015, which was 75 out of 100, and stood at 16th place. In 2000, the US achieved its highest ranking, 14th.

Below is the ranking of the top ten countries with the highest score in the CPI -

Below are the ranking of the ten countries with the lowest ranking and score at the bottom of the CPI -