Measuring corruption in developed countries

• Název práce v češtině: Měření politické korupce
• Název v anglickém jazyce: Measuring corruption in developed countries
• Klíčová slova: indexy, institucionální kvalita, protiprávní jednání, měření korupce, veřejná správa, vyspělé ekonomiky
• Klíčová slova anglicky: advanced economies, illegal behavior, indices, institutional quality, measuring corruption, public administration
• Akademický rok vypsání: 2010/2011
• Typ práce: diplomová práce
• Jazyk práce: angličtina
• Ústav: Institut ekonomických studií (23-IES)
• Vedoucí / školitel: PhDr. Jaromír Baxa, Ph.D.
• Řešitel: skrytý - zadáno vedoucím/školitelem
• Datum přihlášení: 19.05.2011
• Datum zadání: 19.05.2011
• Datum a čas obhajoby: 02.02.2012 00:00
• Místo konání obhajoby: IES, Opletalova 26
• Datum odevzdání elektronické podoby: 09.01.2012
• Datum proběhlé obhajoby: 02.02.2012
• Oponenti: prof. Ing. Karel Janda, Dr., Ph.D., M.A.

Zásady pro vypracování

A corruption problem has gained importance over the last 30 years. Corruption can be used to explain varying
levels of volatility in global financial markets. In addition, international bodies such as the World Bank,
International Monetary Fund (IMF), United Nations, OECD, European Union, and others are emphasizing
corruption control in their recommendations for growth. These international institutions charge high prices for
the countries corruption rankings used by the international companies and banks emphasizing the importance
of this topic for the economic analysis.
Empirical research on this topic has been hampered by the lack of adequate data until 1995, when the most
popular measure of corruption, Transparency international’s corruption perception index (CPI), was launched.
The research on corruption has come under the limelight recently. Nevertheless, there is still a need for further
research in macroeconomic areas of this problem. Macroeconomic consequences of corruption did not get as
much attention as the microeconomic aspects discussed within the framework of the rational-choice theory,
public choice theory, or even a principal-agent problem.
The thesis focuses on the consequences of corruption on the macroeconomic performance of developed
countries. Particularly, even though the distinction between different types of corruption can be blurred, the
thesis focuses on the most dangerous and hidden kind of corruption, i.e. grand or political corruption, and its
determinants. What is particularly questionable is on which scope CPI captures this kind of corruption as
proclaimed in its methodology. The main contribution should be a critical assessment of the CPI’s ranking for
the developed countries. The alternative methodologies of the so-called “second stage corruption measures”
such as indices published by the Global Integrity or the Open Budget Survey will be compared for a set of
countries.
The main area of the interest is the economic and institutional environment of the Czech Republic and other
EU countries with the sufficient data. However, for a comprehensive analysis of institutions driving corruption,
other advanced economies worldwide (as characterized by IMF) will also be used. This enables us to
conclude with the cases studies presenting successful policy implications of anti-corruption programs in
particular countries worldwide as well as characterize the main limitations of the CPI’s rankings. This is a very
new research area that is gaining on importance and can serve as a useful diagnostic tool for further
economic research.

Seznam odborné literatury

1. ARON, J., 2000. Growth and Institutions: A Review of Evidence. The International Bank for
Reconstruction and Development: The World Bank Research Observer, 15 (1), pp. 99-135.
2. BULVA, R., 2007. Korupce v tranzitivních ekonomikách. Bachelor Thesis. Charles University in
Prague.
3. DREHER, A., KOTSOGIANNIS, C. and McCORRISTON, S., 2007. Corruption around the world:
Evidence from a structural model. Journal of Comparative Economics, 35 (2007), pp. 443-466.
4. FISMAN, R., MIGUEL, E., 2006. Cultures of Corruption: Evidence from Diplomatic Parking Tickets.
NBER Working Paper Series, WP 12312, p.36. Available at: <http://www.nber.org/papers/w12312>
[Accessed 26 April 2011].
5. GALTUNG, F., 2005. Measuring the Immeasurable: Boundaries and Functions of (Macro) Corruption
Indices. In: Galtung, F. and Sampford, C., ed. 2006. Measuring Corruption. Hampshire: Ashgate,
pp.101-129. ISBN 0-7546-2405-6.
6. Global Integrity, 2011: Global Integrity Report. Available at: <http://report.globalintegrity.org/>
[Accessed 23 April 2011].
7. GOEL, R.K., and NELSON, M.A., 2005. Economic Freedom versus Political Freedom: Cross-Country
Influences on Corruption. [pdf] Australian Economic Papers, 44 (2), pp. 121-133. Available at:
<http://www.bilkent.edu.tr/~economics/papers/departmental%20seminars/2005/Goel-economic.pdf>
[Accessed 22 April 2011].
8. HOUSTON, D.A, 1997. Can Corruption ever improve an economy? [pdf] Cato Journal, 27 (3), pp.
325-342. Available at: <https://www.socialsecurity.org/pubs/journal/cj27n3/cj27n3-2.pdf> [Accessed
20 April 2011].
9. International Budget Partnership, 2011. Open Budget Survey 2010. Available at:
<http://www.internationalbudget.org/what-we-do/open-budget-survey/> [Accessed 24 April 2011].
10. JAIN, A.K., 2001. Corruption: A Review. Journal of Economic Surveys, 15 (1), pp. 71-120.
11. KNACK, S., 2006. Measuring Corruption in Eastern Europe and Central Asia: A Critique of the Cross-
Country Indicators. [pdf] World Bank Policy Research Working Paper 3968. Available at:
<http://ideas.repec.org/p/wbk/wbrwps/3968.html> [Accessed 18 April 2011].
12. KÖRNER, P., KUDRNA, Z. and VYCHODIL, O., 2002. Měření kvality podnikatelského prostředí ve
střední Evropě. Finance a úvěr, 52 (12), pp. 674-697.
13. MARTINEZ-VAZQUEZ, J., del GRANDO, J.A. and BOEX, J, 2007. Fighting Corruption in the Public
Sector (Contributions to Economic Analysis). Amsterdam: Elsevier, p.254. ISBN 978-0-444-52974-9.
14. MAURO, P., 1995. Corruption and Growth. The Quarterly Journal of Economics, 110 (3), pp.681-712.
15. MAURO, P., 1997. The Effects of Corruption on Growth, Investment, and Government Expenditure: A
Cross-Country Analysis. In: K.A. ELLIOTT, ed. 1997. Corruption and the Global Economy.
Washington, DC: Institute for International Economics, pp. 83-107. ISBN 0-88132-233-4.
16. QUAH, J., 2003. Curbing Corruption in Asia (A comparative Study of Six Countries). Singapore:
Eastern Universities Press, p. 241. ISBN 981-210-215-9.
17. ROSE-ACKERMAN, S., 2002. “Grand” corruption and the ethics of global business. Journal of
Banking & Finance, 26 (2002), pp. 1889-1918.
18. SOREIDE, T., 2006. Is it wrong to rank? (A critical assessment of corruption indices). Bergen: Chr.
Michelsen Institute Working Papers, WP 2006:1, p. 13. Available at: <www.cmi.no/publications>
[Accessed 18 April 2011]. ISBN 82-8062-134-2.
19. Transparency International, 2010. Corruption Perceptions Index 2010. Available at:
<http://www.transparency.org/policy_research/surveys_indices/cpi/2010/in_detail#1> [Accessed 23
April 2011].
20. XIN, X. and RUDEL, T.K., 2004. The Context for Political Corruption: A Cross-National Analysis.
Social Science Quarterly, 85 (2), pp. 294-309.

Předběžná náplň práce

A review of the literature on political corruption and CPI will be provided in the first part of thesis. The main
knowledge and ideas established on a topic will be listed, and what their strengths and weaknesses are will be
discussed. The emphasis is going to be placed on the thesis‘s research objective. A critical appraisal will be
used to identify biased estimations in the literature.
The data will be analyzed for period of 1995 until now. The analysis will include the correlation tables among
various measures of corruption levels across the countries. The critical analysis of the CPI will be in the first
stage conducted through the construction of confidence intervals for a list of 30 developed countries.
Moreover, plots of the CPI against various alternative corruption measures help to identify outliers in the CPI’s
assessment.
The regression analysis of the political corruption determinants on the GDP will be provided, followed by the
robustness analysis. This is due to the possible causal relationships between explanatory and dependent
variable. A possible endogenity problem can be eliminated by use of the instrumental variables.

1. There is a statistically significant relationship between the determinants of political corruption and the
relevant data on the economic performance of advanced economies.
2. An impact of political corruption determinants on the economic performance of developed countries is
negative and stronger than the effect of factors of economic corruption.
3. Some outliers among developed countries are expected when plotting CPI against the alternative
measures of political corruption. This arises from the expectation that the political corruption in some
CPI leading countries can be significantly higher than the economic corruption (e.g. Singapore).
4. The CPI is more sufficient in capturing perception of economic corruption rather than the political
corruption. This fact is frequently omitted in the literature.
5. The informative value of the CPI for the EU countries is limited and does not offer very accurate order
of countries. The confidence intervals provide more rigorous comparisons.

Předběžná náplň práce v anglickém jazyce

1. Introduction
a. Definition of political corruption
b. Literature overview
c. Determinants of political corruption
2. Indices measuring corruption
a. CPI – methodology and its limitations
b. Correlation among indices
c. The second stage measures of corruption
3. Accessing impact on GDP
a. Description of data
b. Regression model
c. Robustness analysis, causal relationships
4. Country Case Studies
a. New Zealand, Hong Kong, Finland
b. Limitations of the research
5. Conclusion