Home > Development Economics > Corruption and Development. NZ least corrupt

Corruption and Development. NZ least corrupt

December 13, 2011 Leave a comment Go to comments

Below is a chart from The Economist that looks at the correlation between the Corruption Perceptions Index (CPI) and the Human Development Index (HDI). Remember that the HDI is part of Unit 5 of the Cambridge A2 course.

The Human Development Index (HDI) has been published by the United Nations each year since 1990. The report contains information on economic and social development for every country in the world. However it is important to note that countries with similar ranking HDI values do not always match its ranking in terms of Real GDP per capita. The table below shows 2007 rankings using the HDI method.

The HDI is the average of three indices based on three different variables:

1. Life expectancy at birth
2. Education – a weighted average of adult literacy (two-thirds) and average years of schooling (one third)
3. Real GNP per capita – measured in US dollars, at purchasing power parity* (PPP) exchange rates.

*Purchasing power parity (PPP) is when an amount of money in one country can be exchanged for a quantity of foreign currency, and the two amounts will buy identical baskets of products in both countries.

The Corruption Perceptions Index (CPI) ranks countries/territories based on how corrupt their public sector is perceived to be. It is a composite index, a combination of polls, drawing on corruption-related data collected by a variety of reputable institutions. The CPI reflects the views of observers from around the world, including experts living and working in the countries/territories evaluated.

The chart below shows that after a value of 4 on the x axis there is a much stronger correlation between the CPI and the HDI. Interesting to see New Zealand as perceived as the least corrupt country and also in the top 5 of the HDI. There are countries that go against the trend – Greece, Italy are seen as more corrupt but have a higher HDI. Also poorer countries that have less corruption than their counterparts include Bhutan and Cape Verde.

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