19 Dec 2021

New 2021 IPI data shows Moldova and Argentina among the few achievers

Updated IPI and forecast on www.corruptionrisk.org in 2022


2021 was a banal year in terms of developments, far from the landmark year for anti-corruption expected by some (civil society should know by now that it’s not international summits which change countries, be they UN or whatever, as the magic revolutions from outside just do not work). But it was not a banal year in terms of corruption indicators. The exposure of pressures on the otherwise very useful and influential Doing Business of the World Bank opened the door to the shadow reality of gaming and pressuring around governance indicators, which does not affect the World Bank alone (at least, judging by the performance on Judicial Independence in the World Economic Forum survey of the same problematic countries).

But as the saying goes, what does not kill you makes you stronger. At ERCAS we had already started to work to build not only a new actionable indicator but also a new standard of transparency of governance indicators. This was our T-index, which you can see still on this webpage. This shall move in 2022 on the new www.corruptionrisk.org where we plan to gather all our data on integrity and transparency, now on different webpages, for about 130 countries, and where feedback forms will exist for every score and every reference so that the website users become also contributors and reviewers.

It is in the same transparency index that we found the resources to replace the two Doing Business components which had been, and for good reason, components of the IPI since its creation: Administrative Burden (time to register a business and pay taxes) and Trade Openness (time and cost to import-export). The computer-mediated transparency index that we developed has several items covering transparency and accountability. A group of them correlates more closely with the other four IPI components, showing that they measure the same latent variable that IPI also does – control of corruption. This is a fraction of the T-index that we baptized Administrative Transparency, and which includes direct, observation-based measurements of accessibility and coverage of e-public procurement portals, commerce registers, land cadasters and national auditors’ reports. Together with the second addition, the Online Services Index from the UN E-government survey, former DB components were replaced successfully, so that the new IPI has as good an internal consistency as the old one, with which it correlates closely (0.95). The new website will update all the validation tests that we did and the methodological details. And yes, even if our T-index is based on our direct observations and can be checked by you simply on clicking on the websites it makes just a sixth of the index, so we maintained the decision to exclude the countries involved in the DB scandal – China, Saudi Arabia and Azerbaijan.

The results are twofold:

First, we have results showing long terms trends like stagnation or backsliding. It has not been a good year, as pandemics hurt the quality of governance in many countries. We have very few achievers – the Republic of Moldova seems to have been one, despite some concerns, for its already very low Judicial Independence, and Argentina another. These countries improved despite our change of methodology, which raised the bar because they did not decline in any component and are doing well on transparency. Many other countries kept the same scores and ranks despite changes, from Ukraine or Albania to the United States or Turkey.

However, the second piece of news is a decline largely due to our methodology change. Sub-Saharan Africa and several other countries were doing very well in Doing Business – indeed some smaller countries such as Nepal or North Macedonia have been accused in recent years not of pressuring as China, but of gaming these indicators. With Doing Business gone and replaced by directly observable online services and administrative transparency their scores declined. Only Kenya and South Africa remained roughly at the same level. In Europe, Luxembourg, reputed for its great scores on charts despite some shadowy governance, lost over one full point. The democratic backslide, unrelated to our operations, has also made countries like Myanmar or Tunisia regress significantly. The Administrative Burden average for 2019, the last year we used it, was at 8.36 (1-10 with 10 least burden), while the administrative transparency is much lower at 6.22. The Trade Openness 2019 stood at 8.6, while the Online Services are only at 6.47. And raising transparency scores is more difficult and resource-intensive than just changing the time to import-export or pay taxes, important reforms as those reforms were (despite the difficulty to distinguish between legal and real changes).

Comparing countries over time using IPI ranks is therefore impossible after this change and strongly discouraged in general. IPI is an aggregate indicator, and the statistical procedures needed for aggregates make them in general not very good instruments to use for changes across time. Considering the change in two components, countries should compare themselves against last year simply in order to understand how the change affected them. The 2021 IPI gives precious information on what a country has in place and what is missing when control of corruption is concerned. Transparent business ownership? A free online land cadaster, accessible reports by auditors on corruption or open contracting –  these are the areas newly introduced, as Online Services overlaps in part with the Doing Business indicators removed. This means that a score improvement would follow reform of these areas, alongside with others – such as freedom of the press or judicial independence.

And what should analysts do if they seek to trace change over years? For this, we simply recommend using the disaggregated components, which had not been subjected to normalization and the resulting statistical noise. For data up to 2020, stay on this page central map, for newer data follow us in 2022 on www.corruptionrisk.org where 12-year trends will be available for each country.

Finally, although the introduction of transparency has raised the bar somewhat it is fair to say that the world has never been more prepared to use transparency than it is today. While judicial independence has hardly changed (Argentina is the positive exception), our old e-citizens indicator, which measures digital citizens, and our new Online Services components have been ascending nearly everywhere in the past decade and, of course, last year. Venezuela is nearly alone in backsliding on these items. More and more people have Internet access and are networked with others through social media. Collective action is made easier, and so is monitoring and interacting with the government. Transparency is an important tool for controlling corruption, shown by the association of our new measures with any measure of corruption. But there is not enough of it. Every country can now compare its performance against its neighbours and plan how to evolve.

The big problem remains inequality. The rise in the number of digital citizens makes us hopeful, but the distance between continents remains great and the catch up from one year to another is still insufficient. Over 90% of people have Internet connections in the developed world, versus less than 50% in the developing world. Just 28% enjoy Internet connections in Africa and 48% in the Asia-Pacific, versus 82% in Europe and 77% in the Americas. The transition to good governance is powered by demand: to see what countries will change check where the discrepancy is higher between the state of governance and the number of digital citizens. Critical mass has been building up in places like Moldova and Argentina sufficiently for even our rough instruments to start registering it. Many other countries should get there in the years to come.