Blog 9

Blog 9

                For this analysis, I used the measure of per capita PPP GDP from the World Development Indicators database as the measurement for economic performance, as well as the World Bank’s “Governance Matters” data on Corruption (specifically, the Control of Corruption data). The PPP (purchasing power parity) of the GDP per capita is a good measurement of economic power. It balances out wealth disparities that are present between very rich and very poor people in the same country, and measures how much money a specific product would cost in different countries, correcting for foreign exchange rates (World Development Indicators). The Control of Corruption statistics is defined by the World Bank as “perceptions of the extent to which public power is exercised for private gain.” The score is given on a scale from -2.5 (weak governance) to 2.5 (strong), and is an estimated score. I chose this over other data points because I believe that it better shows the rate of corruption inside the country itself, instead of comparative measurements between countries (Governance Matters). The data for both was taken from 2010, so that the data would be recent but complete. I also removed countries from the sample for which data was not available in both categories (e.g. Greenland, North Korea, etc.).

                As you can see in the graph below, there is a loose correlation between economic development and corruption, and as economic development increases, there is a slight increase in good governance. The graph does not have very tight fit, and several outliers (such as those countries with good governance but weak economic performance) might need explanation.

                My explanation is that there is a causal relationship between the two variables. This is because people who have little chance for honest economic progress  because of a poor national economy will turn to more shady avenues of profit-making, while those in more developed, richer countries have viable opportunities to enrich themselves without harming others. Also, in richer countries, the police force is stronger, which could lead to fewer opportunities for corrupt actions.

REFERENCES

World Bank. Governance Matters website. http://info.worldbank.org/governance/wgi/index.asp           (accessed November 19, 2012).

World Bank. World Development Indicators. http://data.worldbank.org/data-catalog/world-     development-indicators/ (accessed November 19, 2012).