08 December 2012

Perceiving corruption accurately

Click here for the Transparency International and MCC scores published in late 2013.

Transparency International just reported that Timor-Leste moved up 30 places in their annual Corruption Perceptions Index, the biggest climb up the index of any country in the world. Last month, Timor-Leste’s ranking dropped seven places on the U.S. Government’s Millennium Challenge Corporation’s Control of Corruption indicator. Why are they so different? Is corruption here getting worse or better?

As a new, small country struggling to develop its state and economy, Timor-Leste pays a lot of attention to its ratings on international indicators, but these indicators are often misleading, ignoring unique characteristics of our extremely petroleum-export-dependent economy or misrepresenting the rapid changes Timor-Leste is going through.  We should understand these scorecards before we use them to shape policy, and we should give greater weight locally-produced, country-specific data (such as the Government’s not-yet-released Household Income and Expenditure Survey) to really know Timor-Leste’s situation.

Transparency International (TI) calculates a Corruption Perception Index (CPI) for nearly 200 countries every year and publishes them in early December. As with the MCC scorecard, the CPI uses data which is up to two years old, so the new scores represent the situation during 2010-2012.

In the new 2012 CPI, Timor-Leste scored 33 out of 100, ranking 113rd best out of 176 countries rated. In last year’s CPI, our score was worse, and we ranked 143rd out of 183 countries. Great news: Timor-Leste reduced corruption more than every other country in the world! But is it true? We  have a rapidly growing state budget, a minister facing prison, reports about corruption in the media every day and falling scores from other rating agencies. Published international perceptions should be consistent with the country itself.

La'o Hamutuk looked into how Transparency International calculated their figures. We learned that perceptions of corruption in Timor-Leste did not change significantly since last year, but our score got better for four reasons:
  1. Transparency International included seven fewer countries/territories in the 2012 CPI that had been included in 2011 – Macau, Samoa, Vanuatu, Kiribati, Tonga, Solomon Islands and Maldives – because not enough data was available.  All of these had scored better than Timor-Leste in 2011, so removing them automatically moved us up seven places – from 143 to 136.

  2. This year, TI has updated the methodology by which the calculate the CPI, and are using fewer data sources to construct the index overall (17 in 2011 and 13 in 2012). For Timor-Leste, TI used only three indicators for Timor-Leste, down from five last year. This year, they no longer included data from the Asian Development Bank, which had ranked Timor-Leste in a three-way tie for lowest score among 31 countries in 2011. Without the ADB indicator, our ranking automatically improved significantly.

  3. Many countries have corruption perceptions about the same as Timor-Leste, so a very small change in score can result in a large change in ranking. Last year, Timor-Leste was tied for rank 143 with nine countries, so that a tiny improvement would move us up nine ranks. This year, we are in a five-way tie for rank 113, and the score difference between rank 113 and rank 130 (about where we would be without the two prior methodology changes) is only 5 out of 100.

  4. The three indicators TI used this year for Timor-Leste are from the World Bank (Country Policy and Institutional Assessment score on “Transparency, Accountability and Corruption in the Public Sector”), the World Economic Forum (Executive Opinion Survey, two questions on corruption), and Global Insight (Country Risk Ratings). The World Bank publishes their data, and Timor-Leste’s score got slightly worse, from 3.0 to 2.5.  World Economic Forum scores are not published in detail, but Timor-Leste improved slightly, from 3.05 to 3.3. The difference – and almost all of the improvement -- is from the Global Insight score. Neither TI nor IHS (the company which produces Global Insight) would share raw data with La’o Hamutuk, but Timor-Leste apparently improved significantly.
In an email to La’o Hamutuk, Transparency International Research Manager Deborah Hardoon explained why Timor-Leste moved up in the rankings: “The improvement in rank number results from several aspects of comparing countries/territories on a relative index, where position is determined by the assessment of other countries as well as your own. Timor-Leste’s gain in rank comes from the combination of fewer countries this year, the decline of perceptions of corruption for other countries, fewer data sources used to construct Timor-Leste’s score and a small net increase of the raw underlying data sources. We would not say this was an ‘improvement’ per se, as one of three data sources moved in the opposite direction and the change in CPI score is less than the margin of error. Moreover, Timor-Leste still scores worse than nearly 2/3 of all countries – a score of 33 out of 100 clearly demonstrates that much remains to be done to clean up the public sector in Timor-Leste.”

Nevertheless, La’o Hamutuk joins others in appreciating that some international agencies perceive that corruption here is declining compared with other countries. In this year’s CPI ranking, Timor-Leste did better than 19 countries which had scored better than us last year (Dominican Republic, Ecuador, Egypt, Indonesia, Madagascar, Mozambique, Sierra Leone, Vietnam, Lebanon, Nicaragua, Guyana, Honduras, Iran, Kazakhstan, Pakistan, Bangladesh, Cameroon, Syria and Eritrea), many of whose scores fell drastically. Rather than celebrating, Timor-Leste should redouble our efforts to make this improvement significant and permanent.

Timor-Leste needs to do a lot more to reduce and prevent corruption in this country. Wishing and indicators won’t make it happen – and neither will speeches, dialogues and conferences alone.

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