Corruption and the economy
An issue relevant to the current national discourse is the relationship between corruption and economic growth. Is corruption the principal factor that accounts for most of Pakistan’s macroeconomic problems, such as low exports?
The most commonly cited measure of corruption is the Transparency International’s Corruption Perception Index (CPI), which ranks countries as per the perceived level of corruption in their public sectors.
The CPI ranking is based on perception, which may not truly reflect the reality. However, we assume that the perception is largely based on facts. We may, therefore, look at Pakistan’s ranking on the CPI over the last one decade and juxtapose it with the rates of economic and export growth and foreign direct investment (FDI) inflows.
A drop in corruption may not always be consequential for accelerating economic growth
In 2006, Pakistan’s CPI ranking was 142, which improved to 138 in 2007 and further to 134 in 2008. In the following two years, the ranking fell to 139 and 143, respectively. In 2011, it improved to 134, but deteriorated to 139 in 2012. The following four years (2013-16) saw an improvement to 127, 126, 117, and 116. In 2017, the ranking marginally fell to 117. Data shows that between 2006 and 2012, Pakistan’s CPI ranking remained in the range of 134 and 143. During last five years (2013-2017), however, it has been comparatively better — between 116 and 127. During the last three years, in particular, the CPI ranking has varied between 116 and 117. On the basis of the CPI ranking, we can safely say that the level of corruption came down significantly over last half a decade.