Sophie Lefens
Blog 9
Description of indicators: For the level of economic development I chose to
use the PPP GDP data from World Bank. According to World Bank, “purchasing
power parity conversion factor is the number of units a country’s currency
required to buy the same amounts of good and services in the domestic market as
U.S. dollar would buy in the United States. And the conversion factor is for
GDP (gross domestic product). The GDP is the market value of the entire
country’s produced products. This means, that usually, the higher the GDP PPP
the less economically developed the country is because it shows that their
money is worth less. For the corruption indicator I used the Corruption
Perception Index from Transparency International. The results in this index
measure the perceive level of public sector corruption. This kind of corruption
includes bribery, embezzlement and kickbacks in public procurement. This index
is from 1 to 9. The least corrupt countries are in the 7’s 8’s and 9’s.
The bottom
line: The graph shows that there is
a correlation between GDP PPP and the Corruption Perception Index. The
countries with less corruption also have a lower GDP PPP. The inverse of that
would be that the most corrupt countries also have the highest GDP PPP. So the
graph indicates that clearly there is a correlation between economic success
and national corruption. When a state’s government is functioning well and
behaving honestly, then that state’s economy tends to do better, according to
the graph.
Tentative explanation: A reasonable explanation for this pattern would be
that when state governments are dealing in bribes, black mail and embezzlement
they interfere with the flow of the national market and inhibit economic
growth. According to a study conducted by B.Y.U business students, the amount
of government corruption affects that country’s role in international trade.
Foreign Direct Investment (FDI) is considerably lower in the more corrupt
states. Other countries are hesitant to cooperate and engage in business with
governments that could be cheating them and their people at any moment. The
article also says that often in corrupt states, “scarce resources are put into
unproductive channels which acts as a brake on economic development” (Philip
1). The article also discusses that developing countries are especially
vulnerable to government corruption. Corrupt governments often misuse national
funds, which creates an even wider gap between the rich and the poor.
Works Cited
Bryon,
Philip J. "Corruption and Development: The Armenian Case." (2009): n.
pag. Marriott School. Web.
I would have liked to see your graph. There is a fairly wide shift from year to year and the correlations are much less clear. Do you think that would make a difference year by year in terms of FDI? Some factors, specifcally, FDI as you mentioned it, are actually more influenced by perception than by reality. Do you think that the amount of corruption is really shifting that much year to year, or is it just the perception of it?
ReplyDeleteAndrew Muhlestein