Macro-economic outcomes of corruption: a longitudinal empirical study.Abstract What can corruption do to a nation's wealth? Using longitudinal data of 51 nations covering the period 1996 to 2002, the present study found significant correlations between national corruption and numerous important macro-economic performance indicators, including worker compensation levels, foreign direct investment inflows, gross domestic product per capita [Latin, By the heads or polls.] A term used in the Descent and Distribution of the estate of one who dies without a will. It means to share and share alike according to the number of individuals. at purchasing power parity Purchasing power parity The notion that the ratio between domestic and foreign price levels should equal the equilibrium exchange rate between domestic and foreign currencies. , gross domestic product per capita, labour productivity at purchasing power parity, overall productivity growth, overall productivity, and real gross domestic product growth. The results showed that corruption at the national level had far more specific macro-economic implications than previously thought. Implications for research and practice were discussed. Keywords: Macro-economic, Correlates, Bribery bribery Crime of giving a benefit (e.g., money) in order to influence the judgment or conduct of a person in a position of trust (e.g., an official or witness). Accepting a bribe also constitutes a crime. , Corruption Perceptions Index Since 1995, Transparency International has published an annual Corruption Perceptions Index (CPI)[1] ordering the countries of the world according to "the degree to which corruption is perceived to exist among public officials and politicians". ********** Although extant ex·tant adj. 1. Still in existence; not destroyed, lost, or extinct: extant manuscripts. 2. Archaic Standing out; projecting. research has delved into the potential impact of the ethical climate, researchers in general have tended to confine their work to the organisational level of analysis (for example, Barnett and Vaicys, 2000; Cullen, Parboteeah, and Victor, 2003; Ells, Downie, and Kenny, 2002; Koh and Boo, 2001; Peterson, 2002a, 2002b; Schwepker, 2001; Vardi, 2001). To date, we know very little about the specific macro-economic implications of corrupt practices corrupt practices, in politics, fraud connected with elections. The term also refers to various offenses by public officials, including bribery, the sale of offices, granting of public contracts to favored firms or individuals, and granting of land or franchises in at the national level. In the context of this study, the word "nation" is used loosely here to refer to an identifiable economic entity that is governed mostly by its own laws. Corruption may cause significant negative impact on a nation's economy and adversely affect the general well being of its members or citizens. Mauro (2004) of the International Monetary Fund, for example, asserted that "there is increasing recognition that corruption has substantial, adverse effects on economic growth". Likewise, Zemanovicova (2002) argued that "economic impacts of corruption are linked with the losses ensued from internalities in the decision-making process, worsened resource a/locations, deformation deformation /de·for·ma·tion/ (de?for-ma´shun) 1. in dysmorphology, a type of structural defect characterized by the abnormal form or position of a body part, caused by a nondisruptive mechanical force. 2. of economic competition, increased transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). , increased risk for investors, influence on the extent and structure of public expenditure". Carvajal (1999) demonised corruption to have "much the same effect on the development of a nation that cancer has on the life of a biological organism". Hence, when a nation is more corruption-ridden, its economic performance likely will suffer and the general well being of its members will be compromised. Conversely, when a nation is more corruption-free, its economic performance likely will be enhanced and the general well being of its members boosted. The present study was designed to shed light on how corruption at the national level may be related to specific dimensions of the macro-economy and the general well being of its members. A universally accepted measure of national corruption is the 10-year-old national index of corrupt practices, namely, the Corruption Perceptions Index (CPI (1) (Characters Per Inch) The measurement of the density of characters per inch on tape or paper. A printer's CPI button switches character pitch. (2) (Counts Per I ). Wilhelm (2002) recently conducted a validation study to examine the validity of this index. He used one criterion (macro-economic outcome) in his criterion validation analyses--namely, Real Gross Domestic Product per Capita (RGDPPC) for 1998--and found a significant correlation between the CPI and RGDPPC, thus supporting the criterion validity The introduction to this article provides insufficient context for those unfamiliar with the subject matter. Please help [ improve the introduction] to meet Wikipedia's layout standards. You can discuss the issue on the talk page. (for example, whether a measure is related to a relevant outcome) of the CPI. The present study reinforces Wilhelm (2002) and expanded the validation of the CPI on several fronts. First, the present study expanded the single-year outcome or criterion measure used by Wilhelm (2002) to include multiple-year observations covering the period 1996 to 2002. Second, the present study examined the macro-economic implications of the CPI on 19 macro-economic measures instead of only one, thereby enhancing the multi-dimensional rigor rigor /rig·or/ (rig´er) [L.] chill; rigidity. rigor mor´tis the stiffening of a dead body accompanying depletion of adenosine triphosphate in the muscle fibers. of the validation effort tremendously. In addition to the above two improvements, this present study also accounted and controlled for the differences across countries in terms of numerous measures of economic structure, size, and employment structure. Finally, the historical effects were also controlled for to partial out any time-related cumulative distortions that might surface to confound con·found tr.v. con·found·ed, con·found·ing, con·founds 1. To cause to become confused or perplexed. See Synonyms at puzzle. 2. the research results. With all these improvements, the present research thus provided a much more rigorous and multifaceted mul·ti·fac·et·ed adj. Having many facets or aspects. See Synonyms at versatile. Adj. 1. multifaceted - having many aspects; "a many-sided subject"; "a multifaceted undertaking"; "multifarious interests"; "the multifarious assessment of the macro-economic implications of corruption at the national level, as measured by the CPI. In the following sections, we will describe the methods used to ascertain the specific linkages between national corruption and diverse macro-economic performance indicators, size up the criterion validity of the CPI, identify specific effects of importance for decision makers (especially public administrators) to focus on, and enhance our knowledge about what national corruption may do a nation's wealth. Methods Data Sources The unit of analysis for the present study was a nation. A nation was defined loosely here as an identifiable economic entity which might be a sovereign or non-sovereign state. Hongkong SAR (Segmentation And Reassembly) The protocol that converts data to cells for transmission over an ATM network. It is the lower part of the ATM Adaption Layer (AAL), which is responsible for the entire operation. See AAL. SAR - segmentation and reassembly of China, for example, is a "nation" for analytical purposes as well as Singapore, which is a sovereign state SOVEREIGN STATE. One which governs itself independently of any foreign power. . Longitudinal data coveting 1996 to 2002 were collated from the World Competitiveness Yearbook International Institute for Management Development  The of this article or section may be compromised by "peacock terms".You can help Wikipedia by removing peacock terms. ; IMD IMD - intermodulation distortion ) and the Web site of Transparency International Transparency International (TI) is a leading international non-governmental organization addressing corruption. This includes, but is not limited to, political corruption. (http://www.transparency.org). Independent Variable The independent variable for the present study was the CPI (Corruption Perceptions Index), an annual poll of polls published by Transparency International, a Berlin-based non-governmental organisation founded in 1993 to curb corruption globally. The CPI "ranks countries in terms of the degree to which corruption is perceived to exist among public officials and politicians" (Transparency International, 2004). The first Index appeared in 1995 and covered 41 countries. By 2003, the Index had grown to cover 133 countries and had 90 national chapters around the world. To be included in the Index, the nation must have been evaluated by several separate polls (the minimum was two sources initially, which was subsequently increased to three) on the severity of its corruption as perceived by the respondents (numbering thousands). Corruption by definition is a hidden form of illicit/illegal activity that may or may not be made open. Hence, perceptual measures are the next best thing available to gauge the extent of its existence--other than the impossible-to-obtain objective, actual quantity. All countries included in the 2003 Index were surveyed by between three and 13 separate polls. Each year, each nation was given a score of between zero and 10, with 10 being the perfect score indicating that the nation is free from corruption and zero being the worst score indicating that the nation is totally corruption-ridden. Because of its "poll of the polls" nature, the CPI rating for a particular nation in a particular year generally reflects the overall corruption perceptions captured in the preceding few years. Dependent Variables Nineteen specific macro-economic performance indicators were identified as potentially relevant criteria (outcomes) of the nation-level CPI. These indicators encompassed income, employment, and productivity levels as well as the attractiveness and efficiency of the individual economies in terms of local and incoming foreign investments, production, operating costs operating costs npl → gastos mpl operacionales , and others. As the level of corruption at the national level was expected to impact on the entire economy and its members, all these macro-economic measures were expected to correlate with the CPI. The measurement of each of the 19 indicators are briefly described below. Compensation Levels: Total hourly compensation for manufacturing workers (wage plus supplementary benefits Noun 1. supplementary benefit - benefits paid to bring incomes up to minimum levels established by law national assistance, social assistance social insurance - government provision for unemployed, injured, or aged people; financed by contributions from ) in US$. Change in Foreign Direct Investment Inflows: Percentage change in Foreign Direct Investment Inflows over the previous period. Foreign Direct Investment Inflows (Gross): Direct investment flows inward in US$ billions. Foreign Direct Investment Inflows (Log): Logarithm logarithm (lŏg`ərĭthəm) [Gr.,=relation number], number associated with a positive number, being the power to which a third number, called the base, must be raised in order to obtain the given positive number. (base 10) of Foreign Direct Investment Inflows. To reduce the statistical biases that may arise from extreme values. Gross Domestic Product (GDP GDP (guanosine diphosphate): see guanine. ) Per Capita at Purchasing Power Parity: GDP in US$ per capita at current prices and purchasing power parity. Gross Domestic Product Per Capita: GDP in US$ per capita at current prices and exchange rates. Real Gross Domestic Product Growth: Percentage change in GDP computed on a local currency basis at constant prices. Labor Productivity at Purchasing Power Parity (PPP (Point-to-Point Protocol) The most popular method for transporting IP packets over a serial link between the user and the ISP. Developed in 1994 by the IETF and superseding the SLIP protocol, PPP establishes the session between the user's computer and the ISP using ): GDP (PPP) per employee per hour, in US$. Labor Productivity: GDP per employee per hour. Overall Productivity at Purchasing Power Parity: GDP (PPP) per person employed, in US$. Overall Productivity Growth: Percentage change of real GDP Real GDP This inflation-adjusted measure that reflects the value of all goods and services produced in a given year, expressed in base-year prices. Often referred to as "constant-price", "inflation-corrected" GDP or "constant dollar GDP". per person employed. Overall Productivity: GDP per person employed, in US$. Real Gross Domestic Product Growth: Percentage change in GDP computed on a local currency basis at constant prices. Real Gross Domestic Product per Capita Growth: Percentage change in GDP per capita computed on a local currency at constant prices. Gross Domestic Investment: Gross fixed capital formation Gross fixed capital formation (GFCF) is a macroeconomic concept used in official national accounts since the 1930s. Concept and data The statistical aggregate of GFCF is a measure of the net new investment by enterprises in the domestic economy in fixed capital in US$ billions. Log[Gross Domestic Investment]: Logarithm (base 10) of Gross Domestic Investment. To reduce the statistical biases that may arise from extreme values. Unemployment Rate: Percentage of jobless labor force looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. work. Change in Unemployment Rate: Year-to-year change in Unemployment Rate. Unit Labour Cost: Percentage change in labour cost per unit of output from previous period. Control Variables Since countries varied on important dimensions, their differences had to be controlled for in statistical analyses. These control variables included: Historical effects (Year as in the Gregorian calendar Gregorian calendar Solar dating system now in general use. It was proclaimed in 1582 by Pope Gregory XIII as a reform of the Julian calendar. By the Julian reckoning, the solar year comprised 365¹⁄₄ days. ); economic structure (Per cent of GDP in the Industrial Sector; Per cent of GDP in the Services Sector; the default being the agricultural sector); size of the nation/economy (Log[Total Employment (in millions)], Log[GDP (in US$ billions)], Log[Population (in millions)]), and employment structure (Percent of Total Employment in the Industrial Sector; Per cent of Total Employment in the Services Sector; the default being the agricultural sector). "Log" refers to logarithm (base 10) of the respective variables and it is a standard statistical adjustment to reduce the biases that may arise from extreme values. Statistical Analyses Longitudinal data on all of the independent and control variables as well as the dependent variables were collated from the two data sources as mentioned above and included in the statistical analyses. Standard regression analyses were employed to tease out the effects of the CPI. For each of the 19 outcome (dependent) variables (Y's), we ran a separate statistical analysis using the SPSS A statistical package from SPSS, Inc., Chicago (www.spss.com) that runs on PCs, most mainframes and minis and is used extensively in marketing research. It provides over 50 statistical processes, including regression analysis, correlation and analysis of variance. package. For example, to tease out the effects of corruption (CPI) on a nation's Compensation Levels (the outcome or dependent variable), we ran this model: Y = a + [b.sub.1] [x.sub.1] + [b.sub.2] [x.sub.2] + [b.sub.3] [x.sub.3] + [b.sub.4] [x.sub.4] + [b.sub.5] [x.sub.5] + [b.sub.6] [x.sub.6] + [b.sub.7] [x.sub.7] + [b.sub.8] [x.sub.8] + [b.sub.9] CPI where Y was Compensation Level, [x.sub.1] through [x.sub.8] were the eight control variables (i.e., Year, Per cent of GDP in the Industrial Sector, Per cent of GDP in the Services Sector, Log[Total Employment (in millions)], Log[GDP (in US$ billions)], Log[Population (in millions)], Per cent of Total Employment in the Industrial Sector, and Per cent of Total Employment in the Services Sector), and the independent variable was CPI. For simplicity, only the coefficient [b.sub.9] (for CPI) is reported in Table 1. Next, to tease out the effects of corruption (CPI) on Change in Foreign Direct Investment Inflows, we simply included Change in Foreign Direct Investment Inflows as Y in the above model and re-ran the statistical test. Again, only [b.sub.9] (for CPI) is reported in Table 1. The same procedure repeated itself for the rest 17 macro-economic outcome variables. As mentioned, the CPI ratings are reflective of corruption perceptions captured in the preceding few years. Hence, this allowed us to avoid common-time biases without having to realign re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. the data as collated from the two separate sources. However, this was not sufficient to justify a causal attribution at·tri·bu·tion n. 1. The act of attributing, especially the act of establishing a particular person as the creator of a work of art. 2. and the statistical results were a mere reflection of correlations (and not causal linkages) between the CPI and the macro-economic outcome measures. Results The present longitudinal study longitudinal study a chronological study in epidemiology which attempts to establish a relationship between an antecedent cause and a subsequent effect. See also cohort study. covered 51 countries from 1996 to 2002, resulting in a possible maximum of 51 x 7 = 357 nation-year observations. Appendix 1 contains the 51 countries included in the analyses. A list-wise deletion rule was applied to treat missing data, causing the actual number of nation-year observations to drop to about 300 for most of the analyses. The standardised beta for the CPI (the degree of freedom from corruption, with zero being totally corruption-ridden and 10 being totally free from corruption) obtained from the 19 statistical analyses are presented in Table 1. A positive beta indicates a positive correlation Noun 1. positive correlation - a correlation in which large values of one variable are associated with large values of the other and small with small; the correlation coefficient is between 0 and +1 direct correlation between the CPI (the degree of freedom from corruption) and the macro-economic measure; a negative beta indicates a negative correlation Noun 1. negative correlation - a correlation in which large values of one variable are associated with small values of the other; the correlation coefficient is between 0 and -1 indirect correlation between the two variables. All of the statistical analyses accounted for the linear confounding confounding when the effects of two, or more, processes on results cannot be separated, the results are said to be confounded, a cause of bias in disease studies. confounding factor effects of the various control variables. Table 1 shows that a number of macro-economic outcome measures were significantly correlated with the CPI (the degree of freedom from corruption). These outcome variables include Compensation Levels, Foreign Direct Investment Inflows (Log), Gross Domestic Product per Capita at Purchasing Power Parity, Gross Domestic Product per Capita, Labour Productivity at Purchasing Power Parity, Labour Productivity, Overall Productivity Growth, Overall Productivity, and Real Gross Domestic Product Growth. All of the standardised betas were positive, indicating that a more corruption-free nation would likely be better off in terms of the various macro-economic performance outcomes. Conversely, a more corruption-ridden nation would likely suffer in terms of the macroeconomic mac·ro·ec·o·nom·ics n. (used with a sing. verb) The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors. measures. Discussions and Conclusion The present study greatly enhanced the validity of the findings of Wilhelm (2002), who found support for the criterion validity of the CPI based on one macro-economic performance indicator--namely, Real Gross Domestic Product per Capita--and a cross-sectional data Cross-sectional data in statistics and econometrics is a type of one-dimensional data set. Cross-sectional data refers to data collected by observing many subjects (such as individuals, firms or countries/regions) at the same point of time, or without regard to differences in time. set. We used a seven-year longitudinal data set and 19 performance criteria to re-validate the tenability ten·a·ble adj. 1. Capable of being maintained in argument; rationally defensible: a tenable theory. 2. of the CPI. Based on the rigorous statistical analyses complete with control for the important differences between countries, we conclude that there were nine important macroeconomic outcomes of the CPI. Further, the directions of the correlations were all in line with the detrimental effects of corruption: In a nation that was more ridden by corruption, the economy as a whole would suffer, so would the members of the economy. Conversely, in a nation that has lower level of corruption, the economy as a whole would benefit, so would the members of the economy. The positive effects of a corruption-free environment were evident in terms of higher Compensation Levels (for manufacturing workers), Foreign Direct Investment Inflows (Log), Gross Domestic Product per Capita at Purchasing Power Parity, Gross Domestic Product per Capita, Labour Productivity at Purchasing Power Parity, Labour Productivity, Overall Productivity Growth, Overall Productivity, and Real Gross Domestic Product Growth. The results of the present study were in line with the views of many researchers, such as Zemanovicova (2002) and Carvajal (1999). These researchers have asserted the negative impact of corruption on national economies. An interesting question stemming from our results and these researchers' views is: If corruption does have wide-ranging negative economic impact, then why do governments not root it out? Mauro (2002) argues that "when corruption is widespread, individuals do not have incentives to fight it even if everybody would be better off without it". Xin and Rudel (2004) further identified a number of contextual factors that might have helped corruption to persist in Verb 1. persist in - do something repeatedly and showing no intention to stop; "We continued our research into the cause of the illness"; "The landlord persists in asking us to move" continue political leadership, including monopoly power, little accountability, wide discretion, poverty, large populations, small pubic pubic /pu·bic/ (pu´bik) pertaining to or situated near the pubes, the pubic bone, or the pubic region. pu·bic adj. 1. sectors, and historically-based differences in political cultures across broad geographical regions. Robertson and Watson found empirical evidence to support the notion that "the more rapid the rate of change in foreign direct investment, the higher the level of corruption". Werlin (2003) simply argued that "the difference between poor countries and rich countries has to do with governance rather than resources". Hence, it appears that while it is desirable to have a corruption-free environment, many contextual factors and individual factors (including the lack of political will to change for the better as well as the presence of political will to maintain the status quo [Latin, The existing state of things at any given date.] Status quo ante bellum means the state of things before the war. The status quo to be preserved by a preliminary injunction is the last actual, peaceable, uncontested status which preceded the pending controversy. to reap personal gains) may prevent a nation from moving forward in fighting corruption. Although the present study does not offer concrete solutions to help governments worldwide to fight corruption, it points to the concrete benefits of a corruption-free environment (or the concrete costs of a corruption-ridden environment). With the present study, we now have a better understanding and a more complete picture about the macro-economic implications of corruption at the national level and on a longitudinal basis. Further work is necessary to formulate action plans to make the world a more corruption-free place to live in. One good starting point Noun 1. starting point - earliest limiting point terminus a quo commencement, get-go, offset, outset, showtime, starting time, beginning, start, kickoff, first - the time at which something is supposed to begin; "they got an early start"; "she knew from the may be to see and learn from the contrasting experiences of the Netherlands versus Ghana, Singapore versus Jamaica, and Japan versus Nigeria (Werlin, 2003). We sincerely call on all researchers to give their input in this altruistic al·tru·ism n. 1. Unselfish concern for the welfare of others; selflessness. 2. Zoology Instinctive cooperative behavior that is detrimental to the individual but contributes to the survival of the species. effort. Appendix 1:51 Countries included in the Analyses Argentina Australia Austria Belgium Brazil Canada Chile China Colombia Czech Republic Denmark Estonia Finland France Germany Greece Hong Kong SAR Hungary Iceland India Indonesia Ireland Israel Italy Japan Jordan Korea (South) Luxembourg Malaysia Mexico Netherlands New Zealand Norway Philippines Poland Portugal Romania Russia Singapore Slovak Republic Slovenia South Africa Spain Sweden Switzerland Taiwan Thailand Turkey United Kingdom United States Venezuela References Barnett T and C Vaicys, 2000. "The Moderating Effect of Individuals' Perceptions of Ethical Work Climate on Ethical Judgments and Behavioral Intentions". Journal of Business Ethics business ethics, the study and evaluation of decision making by businesses according to moral concepts and judgments. Ethical questions range from practical, narrowly defined issues, such as a company's obligation to be honest with its customers, to broader social , Vol 27, pp 351-362. Carvajal R, 1999. "Large-scale Corruption: Definition, Causes, and Cures". Systemic Practice and Action Research, Vol 12, pp 335-353. Cullen JB, KP Parboteeah and B Victor, 2003. "The Effects of Ethical Climates on Organisational Commitment: A Two-study Analysis". Journal of Business Ethics, Vol 46, pp 127-141. Ells C, J Downie and N Kenny, 2002. "An Assessment of Ethical Climate in Three Healthcare Organizations". Journal of Clinical Ethics, Vol 13, pp 18-28. Koh HC and EHY EHY European High Yield Boo, 2001. "The Link Between Organizational Ethics Organizational Ethics is the ethics of an organization, and it is how an organization ethically responds to an internal or external stimulus. Organizational ethics is interdependent with the organizational culture. and Job Satisfaction: A Study of Managers in Singapore". Journal of Business Ethics, Vol 29, pp 309-324. Mauro P, 2004. "The Persistence of Corruption and Slow Economic Growth". IMF IMF See: International Monetary Fund IMF See International Monetary Fund (IMF). Staff Papers, Vol 51, pp 1-18. Peterson DK, 2002a. "The Relationship Between Unethical unethical said of conduct not conforming with professional ethics. Behavior and the Dimensions of the Ethical Climate Questionnaire". Journal of Business Ethics, Vol 41, pp 313-326. --2002b. "Deviant deviant /de·vi·ant/ (de´ve-int) 1. varying from a determinable standard. 2. a person with characteristics varying from what is considered standard or normal. de·vi·ant adj. Workplace Behavior and the Organization's Ethical Climate". Journal of Business and Psychology, Vol 17, pp 47-61. Robertson CJ and A Watson, 2004. "Corruption and Change: The Impact of Foreign Direct Investment". Strategic Management Journal, Vol 25, pp 385-396. Schwepker CH, 2001. "Ethical Climate's Relationship to Job Satisfaction, Organizational Commitment In the study of organizational behavior and Industrial/Organizational Psychology, organizational commitment is, in a general sense, the employee's psychological attachment to the organization. , and Turnover Intention in the Sales Force". Journal of Business Research, Vol 54, pp 39-52. Transparency International, 2004. www.transparency.org/surveys/index.html#cpi accessed on June 24. Vardi Y, 2001. "The Effects of Organizational and Ethical Climates on Misconduct at Work". Journal of Business Ethics, Vol 29, pp 325-337. Werlin HH, 2003. "Poor Nations, Rich Nations: A Theory of Governance". Public Administration Review, Vol 63, pp 329-342. Wilhelm PG, 2002. "International Validation of the Corruption Perceptions Index: Implications for Business Ethics and Entrepreneurship Education  should be added to this article, to conform with Wikipedia's Manual of Style.Please discuss this issue on the talk page. ". Journal of Business Ethics, Vol 35, pp 177-190. Xin XH and TK Rudel, 2004. "The Context for Political Corruption In broad terms, political corruption is the misuse by government officials of their governmental powers for illegitimate private gain. Misuse of government power for other purposes, like repression of political opponents and general police brutality, is not considered political : A Cross-national Analysis". Social Science Quarterly, Vol 85, pp 294-309. Zemanovicova D, 2002. "Economic Aspects of Corruption". Ekonomicky Casopis, Vol 50, pp 182-196. Lim Ghee Soon Department of Management and Organisation National University of Singapore The National University of Singapore (Abbreviation: NUS) is Singapore's oldest university. It is the largest university in the country in terms of student enrollment and curriculum offered.
Table 1: Regression Results of the Macro-economic Impact
of Corruption at the National Level (1996 to 2002)
Macro-economic Standardised Beta
Outcome Measure for the Corruption
Perceptions Index
(CPI) (2)
Compensation Levels 0.29 ****
Change in Foreign Direct Investment Inflows -0.09 (ns)
Foreign Direct Investment Inflows (Gross) 0.15 (ns)
Foreign Direct Investment Inflows (Log) 0.19 *
Gross Domestic Product per Capita at 0.09 *
Purchasing Power Parity
Gross Domestic Product per Capita 0.12 **
Real Gross Domestic Product Growth 0.08 (ns)
Labour Productivity at Purchasing Power Parity 0.13 *
Labour Productivity 0.11 **
Overall Productivity at Purchasing Power Parity 0.09 (ns)
Overall Productivity Growth 0.26 *
Overall Productivity 0.09 *
Real Gross Domestic Product Growth 0.21 *
Real Gross Domestic Product per Capita Growth 0.19 (ns)
Gross Domestic Investment -0.05 (ns)
Log[Gross Domestic Investment] -0.01 (ns)
Unemployment Rate 0.04 (ns)
Change in Unemployment Rate -0.16 (ns)
Unit Labour Cost -0.17 (ns)
(1) All regression analyses controlled for historical effects (Year),
economic structure (Per cent of GDP in the Industrial Sector; Per cent
of GDP in the Services Sector; the default being the Agricultural
Sector), nation size (Log[Total Employment (in millions)]; Log[GDP
(in US$ billions)]; Log[Population (in millions)], and employment
structure (Per cent of Total Employment in the Industrial Sector;
Per cent of Total Employment in the Services Sector; the default
being the Agricultural Sector).
(2) Between the score of zero to 0: zero means totally corruption-
ridden; 10 means totally corruption-free.
(ns) Not significant
* p < 0.05
** p < 0.01
*** p < 0.001 p < 0.0001
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