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Jakarta Post

Corruption Perception Index: What does it really mean?

  • Dedy Eryanto
    Dedy Eryanto

    PhD Candidate focusing on public sector integrity and management at the Victoria University of Wellington

Wellington   /   Fri, February 8, 2019   /   02:44 pm
Corruption Perception Index: What does it really mean? The release of a new CPI report always makes headlines. However, do we really understand what CPI really means? (Shutterstock/Atstock Productions)

On Jan. 29, the global graft watchdog Transparency International (TI) released the 2018 Corruption Perception Index (CPI). Indonesia shows marginal improvement as it scores at 38, one point higher than the 2017  score at 37.

In Southeast Asia, Indonesia ranks fourth after Singapore ( 85 ), Brunei Darussalam ( 63 ), and Malaysia ( 47 ). Other neighboring countries scoring less than Indonesia include the Philippines ( 36 ), Thailand ( 36 ), and Timor Leste ( 35 ).

The release of a new CPI report always makes headlines. However, do we really understand what CPI really means?

People refer to the CPI as an indicator of corruption across countries since it was introduced by TI in 1995. As a leading global indicator of public sector corruption, according to TI, the Index sends a powerful message and governments have been forced to consider and act on graft in their countries.

A senior partner of an international anti-corruption agency, Global Integrity Group, Stuart Gilman argued that CPI had greater impacts than just a powerful message. Some officials could be promoted while others could lose their jobs. Foreign investors could increase their investments or pull them out from a specific country. Even in few extreme cases, a bad CPI score could contribute to pressures for rulers to resign.

Gilman noted a significant number of academic papers each year cite the CPI in exploring the corruption phenomena, though it is principally based on subjective perceptions of a country’s level of corruption.

Scholars have long raised largely ignored critiques regarding the methodology, validity, and context.    

First regarding methodology, as Gilman describes, the CPI is derived from a mathematical composite of 13 different sub-indicators. These sub-indicators are perception surveys that are statistically normed and then placed into a formula to derive a numerical representation, which then converts to a ranking. TI does not conduct its own survey and depends on other institutions’ survey. In addition, Gilman argues that the sub-indicators at times solicit perceptions concealed as aggregate information. The questions asked include those which respondents could have no accurate information, such as how many judges are corrupt, how many parliamentarians are corrupt, and the percentage of annual sales all businesses pay in corrupt payments.

The second and related challenge for the CPI is the validity of the result.   Perhaps the most acute criticism came from Michael Johnston who pointed out that the CPI was reliable but its statistical validity was questionable.

Another problem of the CPI is its context. Gilman highlights most of the sub-indicators do not focus on corruption. Rather, they stress the business environment in the country, its economic development, or the risks of doing business there. Most of these sub-indicator surveys are prepared for clients in business, banking, or international trade who pay a substantial fee every year for using their analysis. Therefore, what the CPI measures for corruption could have different meanings in particular contexts. 

The TI clearly states that the CPI is based on perceptions. Despite shortcomings it remains well-known to justify claims that some countries are better than others in terms of preventing and overcoming corruption. However, it must be interpreted and used wisely; as corruption is a complex phenomenon which needs a broader perspective rather than just being represented by a single figure every year.

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The writer is a PhD Candidate focusing on public sector integrity and management at the Victoria University of Wellington, New Zealand. He joined an Indonesian delegation to a 2016 meeting of the Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting in Geneva, Switzerland.

Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.