Corruption
Perception Index: Can We Trust TI ?
Trinidad Express
Port
Spain
Petroleumworldtt.com
11 26 06
There
were several important developments in the Trinidad
and Tobago energy sector over the last fortnight,
which under normal circumstances would be discussed
in this column. The National Gas Company (NGC) made
an initial grant of $3 million to the University
of Trinidad and Tobago (UTT) as partial funding
for the Natural Gas Institute of the Americas, BHP's
a new oil find in its East Coast marine acreage,
while Petro-Canada, hoping to do the same, finally
secured drilling rigs for its exploration programme
off Tobago. The Government has finally laid the
Heritage and Revenue Stabilisation Fund Bill in
Parliament. As important as these developments were
they failed to grab the headlines. The entire country
seemed distracted by the latest Corruption Perception
Index report of Transparency International. Like
other reports done by international watchdog agencies,
the CPI has several flaws which call the credibility
of Transparency International into question.
The
report ranks Trinidad and Tobago at No.79 from a
field of 163 countries, with a corruption index
score of 3.2. This compared with a ranking of 61
and a score of 3.8 in 2004. Barbados (24th) is the
highest ranked Caribbean country with a score of
6.7 while Dominica (53rd 4.5), Jamaica (61st 3.7),
Grenada (66th 3.5) and even Mexico ( 70th 3.3) are
among the regional countries ranked above Trinidad
and Tobago. There are several grounds for questioning
the validity of the CPI. The first question is exactly
whose perception does it represent? Listening to
TI in Trinidad, one gets the impression that the
index is compiled from a broad based survey of local
and foreign participants. But visit the TI site
and one learns that the CPI is based on a survey
of about 10 international organisations, most of
whom are business research consulting firms. Perhaps
the most direct consequence of an increasing perception
of corruption is that it undermines investor confidence
in a country. It is ironic, but not surprising that
the country that has attracted the most foreign
investment in the region continues to slide down
the Corruption Index scale. In compiling its Index,
it is apparent now that TI does not directly seek
the opinion of investors, local or foreign. Few,
if any of the research consulting firms polled in
the development of this index have ever invested
money anywhere in the Caribbean or in the developing
world for that matter. Even if one is prepared to
accept that these organisations do give an unbiased
opinion, the accuracy of the score is subject to
question. According to TI itself, "the accuracy
of the confidence interval estimates increases with
the number of sources used in compiling the Index.
If seven sources are used, the accuracy is over
81 per cent, for four sources- like is the case
with Trinidad and Tobago and Tobago, the accuracy
is only 70 per cent. To say this another way, there
is a 30 per cent chance of error in the estimates
given or there is only a 70 per cent chance that
the estimates are correct. While there were on average
seven reporting sources of information for the top
20 countries, for Trinidad and Tobago there were
only four sources. For Cuba, Grenada, and Belize,
there were only three sources of information. It
is also interesting to look at the organisations
that were polled to give T&T its lowest ever
score on the CPI. These were World Markets Research
Centre, (WMRC), World Economic Forum (WEF), the
Merchant International Group (MIG) and the Economist
Intelligence Unit (EIU). The first significant feature
is that three of the four firms were English firms.
It is not that I have anything against the English.
However, if a nutritionist researching households'
perception of the nutritional value of coconuts
conducts a survey in one house, the likelihood of
an unbiased result is very slim. The same is true
for this survey of corruption perception in which
75 per cent of respondents came from her Majesty's
house.
The
second characteristic is that these are all consulting
and not investment firms. The credentials of the
Economist Intelligence Unit (EIU )are incontestable.
EIU stands tall as a world leader in the provision
of country, industry and management intelligence
and analysis for over five decades. They are publishers
of the highly reputable Economist magazine and periodic
country reports of high quality. MIG's key area
of expertise is in research, intelligence and investigation.
The
Merchant International Group Limited is a non-conventional
strategic research and corporate intelligence company
developed to provide a unique range of support services
to corporations in foreign markets. Its flagship
product is the monthly publication Global Risk Trends
(GRT) which looks at seven countries in each issue.
Corruption is one of the indicators used in developing
its GAD score-a proprietary risk index.
The
World Economic Forum (WEF) is a Geneva-based foundation
whose annual meeting provides a platform for discussion
of global economic problems among top business leaders,
national political leaders (presidents, prime ministers
and others), and selected intellectuals and journalists.
However, critics argue that the World Economic Forum
is really just a business forum, where the richest
businesses can easily negotiate deals with one another
and lobby the world's most powerful politicians,
and that the aim is profit-making rather than solving
economic problems such as poverty.
The
World Markets Research Centre is now defunct. It
has been absorbed by Global Insight another international
provider of economic and financial analysis, market
intelligence and forecasts. One is tempted to conclude
that WMRC was not strong enough to maintain its
market share.
Are
the views of these organisations, who themselves
are known to rely on second hand information, sufficient
to rate countries' for corruption? Shouldn't TI
do its own independent surveys involving a cross
section of interests? Perhaps, the result may be
the same but we would then have the confidence that
the sample was unbiased.
Trinidad
Express
Wednesday, November 22nd 2006
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©2006 Trinidad Express . All Rights Reserved.
