Is there a direct effect of corruption on growth?

Transparency International has just released its 2009 Corruption Perceptions Index (CPI), which ranks public sector corruption levels in 180 nations.

The least corrupt countries are New Zealand, Denmark, Singapore, Sweden and Switzerland, while Iran, Venezuela, Turkmenistan, Uzbekistan, Chad, Iraq, Sudan, Myanmar, Afghanistan, and Somalia represented the most corrupt countries in the world.

So what is the effect of corruption on growth? In a new paper, Ratbek Dzhumashev (Monash University) examines this question.

His research “shows that direct and indirect growth effects of corruption can be statistically significant. Moreover, the empirical results confirm the existence of both negative and positive growth effect of corruption.”

On the negative end, corruption inhibits growth “by distorting the publicly provided productive externality and by deteriorating the overall business climate and perpetuating bad expectations about economic opportunities.”

On the positive end, he finds that “investment levels are higher with an increase in corruption levels, other things being equal.”

Dzhumashev concludes:

Nevertheless, the overall effect of corruption is negative, as the negative effects transmitted directly and through the public sector inefficiencies are greater than the positive effect through investment.

A Map of the Internet’s Black Holes

Frank Jacobs writes:

The series of tubes famously dubbed the ‘internets’ by president G.W. Bush* constitute a world wide web of interconnectedness. But, as this map demonstrates, there are some black holes in that web. They represent the 15 countries that limit or prohibit their citizens’ access to internet as a way of censoring the free flow of information.

Perhaps most notorious among those countries is China, with its Great Firewall (and its insistence on self-censorship by non-Chinese companies operating within the Middle Kingdom). Other countries also maintain firewalls, notably Saudi Arabia, while less-developed nations might just not allow their citizens to own computers.

* : it was Alaska Senator Ted Stevens who called the internet ‘a series of tubes’. George W. Bush referred to the world wide web as ‘the internets’ both in the 2000 and the 2004 presidential election campaigns.

The above map was created by Reporters Without Borders.  Below is the list of the 15 internet-restricting nations and their press freedom ranking. “Internet censorship,” Frank Jabobs writes,”i s a strong indicator of press censorship in general:”

1. Maldives (144)
2. Tunisia (148)
3. Belarus (151)
4. Libya (152)
5. Syria (153)
6. Vietnam (155)
7. Uzbekistan (158)
8. Nepal (159)
9. Saudi Arabia (161)
10. Iran (162)
11. China (163)
12. Myanmar/Burma (164)
13. Cuba (165)
14. Turkmenistan (167)
15. North Korea (168 and very last on the list)

The world without the bottom 5%

This is how the world would look if the bottom 5 percent of global GDP contributors were removed. This would constitute the removal of nearly 3 billion people, primarily form Africa and South Asia.

The countries erased include:

Zimbabwe, Burundi, DR Congo, Liberia, Guinea-Bissau, Eritrea, Malawi, Ethiopia, Sierra Leone, Niger, Afghanistan, Togo, Guinea, Uganda, Madagascar, the Central African Republic, Nepal, Myanmar (Burma), Rwanda, Mozambique, East Timor, the Gambia, Bangladesh, Tanzania, Burkina Faso, Mali, Lesotho, Ghana, Haiti, Tajikistan, the Comoros, Cambodia, Laos, Benin, Kenya, Chad, the Solomon Islands, Kyrgyzstan, India, Nicaragua, Uzbekistan, Vietnam, Mauritania, Pakistan, Senegal, Sao Tome and Principe, Ivory Coast, Zambia, the Yemen, Cameroon, Djibouti, Papua New Guinea, Kiribati, Nigeria, Guyana, the Sudan, Bolivia, Moldova, Honduras, the Philippines, Sri Lanka, Mongolia, Bhutan, Egypt, Vanuatu, Tonga, Paraguay, Morocco, Syria, Swaziland, Samoa, Guatemala, Georgia, the Congo, Iraq, Armenia, Jordan, Cape Verde, the Maldives, Fiji and Namibia.

This represents 81 countries amounting to 2.9 billion people, or 43 percent of the world population. This, however, represents only 5 percent of world GDP.

HT: Strange Maps