This chart (courtesy of the Economist) shows the strong correlation between corruptiuon and human development. Transparency International’s annual Corruption Perceptions Index (CPI) measures the perceived levels of public-sector graft by aggregating independent surveys from across the globe. The United Nations’ Human Development Index (HDI) measures a combination of health, wealth, and education.
Although there is a broad correlation between the two indicators, the relationship is not a simple one across the whole spectrum of countries. Instead, there appears to be three categories of development levels:
- At the bottom, there is mainly failed states, very poor countries, and places where governments have a history of excessive intervention in the economy (Turkmenistan, Venezuela, Cuba).
- At the top, there is the richest countries in the world, including most of the OECD and places such as Singapore, Hong Kong, Barbados, Bahamas and Qatar.
- When the corruption index is between approximately 2.0 and 4.0 there appears to be little relationship with the human development index.
The above suggests that:
- Reducing corruption when it is above a certain abysmal level has substantial payoffs.
- Once this level has been crossed, however, countries can make substantial development progress even with relatively high levels of corruption (meaning an excessive focus on the issue may be counterproductive at times).
- Once countries are somewhat developed (putting them at around higher middle income level status), reducing corruption again becomes critical; states rarely become wealthy with mediocre institutions.