Corruption and economic success can cohabit

For decades, Western leadership (led by the US) has played a major role in terms of encouraging freer trade to promote economic prosperity for a growing proportion of the world population.

With certain nations prepared to take on substantial trade deficits (and debt levels) to help fuel international trade, such policies have provided greater export opportunities for more nations.

To free trade supporters, it did not matter if Western nations lost global share of GDP market, as long as a bigger overall cake provided participating nations with opportunities to enhance national economic levels.  

But support for freer trade should not mean that we merely stick our heads in the sand and simply hope for the best. The public should be informed of both positive and negative trends associated with freer trade.

The following table, indicating national GDP (nominal terms) and corruption ratings of 52 of the largest national economies, suggests that all is not well.  While one would hope that Western nations would retain some advantage by promoting and adhering to greater transparency and less corruption, the evidence indicates otherwise.

The table indicates that poorly ranked nations in terms of corruption have benefited most from world trade since 2000, at least in terms of national GDP growth terms.

World and National GDP (IMF) 2000 and 2010 (US millions of dollars) & Transparency International (TI) Corruption Perceptions Index 2000 and 2010

China, which increased its share of global GDP from 4 to 9.3 per cent, barely improved its corruption perception score from 3.1 to 3.5 (10 being perfect). Brazil’s global GDP share rose from 1.9 to 3.3 per cent, yet its corruption score remained similar (3.9 and 3.7). India’s global GDP share rose from 1.4 to 2.3 per cent, and its corruption score improved from 2.8 to 3.3. Russia’s share of world GDP rose from 0.8 to 2.4 per cent, but its corruption score stayed the same at 2.1.

In fact with 28 nations cited having corruption scores of 5.0 or less in 2000, 24 of them gained global market share. As of 2010, only two of the same 28 nations (Poland and South Korea) had improved their corruption scores to over 5.0 from 2000 levels.

In contrast, only 12 of the 24 nations with corruption scores of over 5.0 in 2000 improved their share of global GDP. This included Australia, New Zealand, Canada and Norway.

Of the 14 nations that had corruption scores of 7.5 or better in 2000, just seven improved their share of global GDP by 2010. Of the seven that lost global GDP share, the US suffered most (30.9 to 23.6 per cent).