Bribe Payers Index 2011: When trade is anything but free.

Deborah Hardoon

As the G20 prepare to meet in Cannes, Transparency International’s new report serves as a timely reminder of some unwarranted consequences of trade and investment and the need for a global effort to stop corruption in all its forms. Deborah Hardoon, Senior Research Coordinator, discusses the global impact of the countries ranked in the 2011 Bribe Payers Index.

As trade and investment cross borders, bribery, illicit financial flows and stolen assets can too, unless there is a global effort to stop corruption in all its forms.

Today, Transparency International publishes the 2011 Bribe Payers Index. The index is a reminder that bribery and corruption are a global issue. It deliberately focuses on suppliers of bribes: companies from the wealthiest countries that use bribery in their international business dealings. The Bribe Payers Index holds both these companies, and the countries they are from, to account for their role in providing the financial incentives that propagate bribery and corruption around the world.

BPI bubble chart

The index is important not only for the countries ranked in the Index; but in today’s globalized world, the findings reflect an impact that can be felt by everyone.

The trade and investment originating from these wealthy countries finds its way to all corners of the globe, as do the bribes paid as part of these business transactions.

And with no country scoring a clean 10 on the Bribe Payers Index 2011 it is clear that companies from all countries ranked are perceived to engage in bribery abroad to some extent.

The chart above plots the scores of the 28 countries ranked in the Bribe Payers Index against their scores on the 2010 Corruption Perceptions Index.

Each country is represented by a bubble, scaled to the value of that country’s exports plus investment in foreign countries, which is an indication of the size of these countries’ impact in the rest of the world.

The United States and Germany, two of the world’s biggest trading nations, represented by two of the biggest bubbles, have been coloured white. Companies from these countries do business abroad on a massive scale, and their business practices are of great influence in the rest of the world. Neither is immune to corruption.

Transparency International’s 2011 progress report on enforcement of the OECD Anti-bribery Convention details a number of high profile foreign bribery cases from both Germany and the United States and it is encouraging that these same governments are taking foreign bribery seriously and prosecuting cases.

In other big economies, where views point to even greater bribery risk by companies abroad, governments are much too slow in their pursuit of cases.

The bubbles representing the emerging BRICS countries (Brazil, Russia, India, China and South Africa) have been coloured yellow. The size of China’s bubble is now bigger than Germany’s, and economic growth in all the BRICS countries is forecast to exceed that of the US and Europe in 2011.

Given the continued growth of these countries and their associated global footprint, the fact that they sit at the bottom of both the Bribe Payers Index and Corruption Perceptions Index is a concern for all of us.

Companies from emerging economies are bringing innovative and cost effective goods and services to the global market place. As these companies and countries continue to grow, more resources have become available to invest overseas, particularly in natural resource industries in the developing world.

These investments not only facilitate access to the core commodities necessary to sustain the BRICS economic growth, but also create jobs, transfer skills and develop infrastructure in the host country. There are many benefits to be gleaned from these trade and investment flows, both for the BRICS and for the countries they trade with.

However, if bribery and corruption comes as part of the package, countries on the receiving end have a lot to lose too. If the package includes incentives for officials to be corrupt, if it manipulates local markets and threatens the quality of services, then the consequences of doing business with these foreign companies can result in significant and lasting damage in recipient countries.

In a world where we are still struggling to recover from the global financial crisis, where businesses are seeking opportunities wherever they can to sustain themselves, it is vital that we recognise that there is a right and a wrong way to do business.

The wrong way includes resorting to bribery, which is costly not only to the business paying the bribe, but also has a high and lasting cost to the society where the bribe is paid.

Share and enjoy: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • TwitThis
  • Twitter
  • Facebook
  • Digg
  • del.icio.us
  • StumbleUpon
  • Reddit
  • MisterWong
  • Google Bookmarks
  • Technorati
  • LinkedIn
  • NewsVine
  • YahooBuzz
  • Print
  • email
Deborah Hardoon

About Deborah Hardoon

Deborah Hardoon is Senior Researcher at Oxfam.

, , , , , , , , , ,

6 Responses to Bribe Payers Index 2011: When trade is anything but free.

  1. Esteban Cardenas 2 November 2011 at 10:30 pm #

    The bribery index is a country branding contest, which results not only from whatever actual level of curruption each nation has, but mainly from the image (in part created by agencies like TI). The design of the survey is wrong. It does ask if the interviewed has business with the refered country, but then it asks about the PERCEPTION on that country, rather than their actual EXPERIENCE. I come from Latin America and I have work experience in North America and in Europe. I have found that specially in northern Europe, prejudice and stereotypes are stronger than empirical data. A simple example: Germans KNOW that Latin Americans are not punctual. So, when I come on time, they say “you are not a real Latin American”. When they come on time, they say, they are being “very German”, and when they come late (which is not unusual), they say they simply got delayed for a valid reason. What you are measuring with perceptions is branding. It is possible to measure factual data which does not implicate the surveyed person. Valid questions would be: “have you lost a contract for refusing to pay a bribe”, “have you been offered a bribe” No? “have you heard from a third person if he has been offered a bribe”. The likelihood to get an answer is good since being offered a bribe is not illegal, unless it is accepted. I wonder how many interviewed businessmen got their “perception” form a business magazine or newspaper which wrote a note in the results form last years TI surveys.

  2. Dennis 3 November 2011 at 6:03 pm #

    I’m wondering why Taiwan doesn’t have a bubble in the chart. Thanks.

  3. Deborah Hardoon
    Deborah Hardoon 4 November 2011 at 4:19 pm #

    Dear Dennis, All the graphs in the BPI report itself use all 28 countries ranked in the BPI. If we included all 28 countries on this graph it would look very crowded, so this graph just picks a few countries from the report for illustration. If Taiwan were on this graph, it would have a bubble roughly the size of Mexico’s and would appear to the left and a little north of South Korea.

  4. Dennis 4 November 2011 at 5:06 pm #

    Thanks. I mistakenly thought that all 28 countries were included. Thank you for your explanation and thank you for the article on the issue that is largely overlooked, while people want everything but virtue.

  5. Deborah Hardoon
    Deborah Hardoon 4 November 2011 at 7:22 pm #

    @ Esteban – Ideally we would gather evidence of the exact value of bribes paid, who they were paid by and to, and why they were paid. But as bribery is illegal, deliberately hidden and an off book transaction, we must explore other ways to measure its prevalence.

    Perceptions are not only an effective way to do this, as it allows us to ask questions in a survey that does not implicate the respondent, and allow for us to capture indirect experiences (if for example they lost a contract due to a competitor using improper means). But also perceptions are nevertheless important in their own right as they influence how others behave in their business dealings with companies from these countries. For example, officials or potential clients and business partners may approach Russian firms with bribery in mind based on their perceptions of how business is done by Russian firms.

Trackbacks/Pingbacks

  1. Wishing you a year filled with integrity | space for transparency - 19 January 2012

    [...] that people in Maldives have a limited understanding of corruption. She said for many corruption is bribery and people engage in corrupt practices such as nepotism or favouritism out of sheer ignorance. I [...]