25 Most Corrupt Countries in the World - Yahoo Finance

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In this article, we discuss the 25 most corrupt countries in the world. You can skip our detailed analysis on corruption around the globe, and go directly to the 5 Most Corrupt Countries in the World.

Corruption refers to the act of misuse of authority for personal gain. It encompasses a broad range of actions, including the taking of bribes to patronage at the expense of a public or corporate office to utilizing authority for actions that are less than sanctioned and/or legal.

Corruption has been a persistent phenomenon around the world to varying degrees. It is most prevalent in developing countries and to a lesser extent, exists in the developed countries as well. According to EconStor’s citation of a World Bank report, an estimated 1 trillion in US Dollars equivalent is paid in bribes worldwide annually.

Corruption as a phenomenon can be quantified by Klitgaard’s Equation proposed by Robert Klitgaard in 1998. It is given as follows:

C = R + D – A

Where C stands for corruption,

R stands for Economic Rent

D stands for Discretionary powers

And A stands for Accountability

In a qualitative sense, the equation states that the more opportunities for economic rent that exist in a country combined with more discretionary powers in the hands of public officials and a lack of accountability, the more corruption will prevail in that country.

In this regard, a country experiences less corruption if it has a healthy market but the government size is small and decentralized and there are strong institutions for accountability.. These conditions exist in developed countries which experience relatively less corruption than the developing countries which usually lack the same.

Various studies have been conducted to narrow down the secondary causes of corruption on top of that. Generally, these include a gagged media and lack of transparency. These factors work together to create an environment for corruption. Similarly, the factors to counter these problems work together as well. For instance, research conducted by EconStor shows that decentralization is effective in combating corruption but only when there’s associated freedom of the press in the given country.

The effects of corruption are damaging to a country’s international standing, economic growth, and human development. For instance, it has been empirically proven that corruption results in income inequality with 20% of the poorest countries experiencing negative effects on income growth due to corruption.

Two significant effects among many other economic consequences of corruption include the loss of investor confidence and the flow of capital outside the country. Apart from that, corruption causes a loss of confidence in the public or corporate sector which is damaging in the long run.

It has been observed that the more transparent a nation’s institutions, the lesser the corruption. The motivation for transparency flows from Rational Choice Theory, which states that individuals are rational decision-makers and weigh costs and benefits while making decisions. Transparency ensures that the public has oversight on public servants’ decision-making. Then there’s corporate transparency which ensures the stakeholders have oversight of the corporate decision making.

Public companies like Bank of America Corporation (NYSE: BAC), Amazon.com, Inc. (NASDAQ: AMZN), Lockheed Martin Corporation (NYSE: LMT), Alphabet Inc. (NASDAQ: GOOG), and JPMorgan Chase & Co. (NYSE: JPM) have very robust institutions in place to create transparency for investors regarding corporate decision making. These types of companies enjoy strong levels of confidence among investors due to institutionalism.

These transparency measures have been empirically shown to reduce corruption in the journal of Crime, Law and Social Change. As discussed above, the data clearly shows corruption is much more prevalent in developing countries than in developed countries. The objective of this article is to list the 25 of the most corrupt countries in the world.

Image by Antonio Cansino from Pixabay

Our Methodology

For our list of the 25 most corrupt countries in the world, we’d be using Transparency International’s Corruption Perception Index of 2020 as our metric. It is the latest report on Corruption across the world and also the most authoritative when it comes to quantifying corruption for different countries. The CPI bases its conclusions on 13 data sources. CPI ranks countries based on a score on a scale of 1-100. Countries on the higher end of the scale happen to be least corrupt while those on the lower end, happen to be the most corrupt.

With this context in mind, let’s now discuss our list of the 25 most corrupt countries in the world.

Most Corrupt Countries in the World

25. Tajikistan

CPI Index Score: 25

Tajikistan is a landlocked Central Asian country. Corruption in the country is widespread in almost all sectors. According to a Freedom House report, corruption is prevalent in almost all sectors in Tajikistan. The report states that the Chairman of Tajikistan’s National Bank had made $550 million in undeclared loans for projects whose trail went to his family, yet no action was taken against the Chairman.The report also highlights the rampant nepotism in Tajikistan with monopoly of trade by those who are connected to the ruling elite.

Companies like Bank of America Corporation (NYSE: BAC), Amazon.com, Inc. (NASDAQ: AMZN), Lockheed Martin Corporation (NYSE: LMT), Alphabet Inc. (NASDAQ: GOOG) and JPMorgan Chase & Co. (NYSE: JPM) are deterred from doing business in Tajikistan for concerns relating to the losing of investor confidence due to corruption in the country.

24. Honduras

CPI Index Score: 24

Honduras is a country in Central America. The Global Americans Organization reports that 140 present as well as former congress members used non-profit NGOs to embezzle illegally made money. The executive power in the country is centralized and public information is virtually impossible to access which creates nurturing conditions for corruption.

23. Zimbabwe

CPI Index Score: 24

Zimbabwe is a country in Southeast Africa. It is an extremely impoverished country with rampant corruption and inequality. Bribes demanded by police and other public officials are normalized to the extent that citizens often do not question it.

22. Nicaragua

CPI Index Score: 22

Nicaragua is located in Central America. Corruption is endemic in the country and has been particularly problematic for the business community because of cronyism and nepotism.

21. Cambodia

CPI Index Score: 21

Cambodia is a country in Southeast Asia. Corruption is rampant in Cambodia, from bribes for traffic violations to legal verdicts, it is woven in the fabric of society.

Companies like Bank of America Corporation (NYSE: BAC), Amazon.com, Inc. (NASDAQ: AMZN), Lockheed Martin Corporation (NYSE: LMT), Alphabet Inc. (NASDAQ: GOOG) and JPMorgan Chase & Co. (NYSE: JPM) avoid opening their operations in countries which lack transparency and ease of business.

20. Chad

CPI Index Score: 21

Chad is a landlocked country in Africa. Corruption is an everyday phenomenon in the country and is normalized. The country’s judicial system is quasi-independent and judges’ verdicts are often influenced by the government. When it comes to the security forces, the country’s police operate with impunity and have been observed involved in various crimes according to Transparency International. Other public offices in the country are also characterized by lack of transparency and access to public information, leading to massive levels of corruption.

Companies like Bank of America Corporation (NYSE: BAC), Amazon.com, Inc. (NASDAQ: AMZN), Lockheed Martin Corporation (NYSE: LMT), Alphabet Inc. (NASDAQ: GOOG) and JPMorgan Chase & Co. (NYSE: JPM) avoid opening their operations in countries like Chad which lack transparency and ease of business.

19. Comoros

CPI Index Score: 21

Comoros, officially called the Union of the Comoros is an island nation located in the Indian Ocean. Comoros has rampant corruption in public offices as well as the country’s judiciary.

18. Eritrea

CPI Index Score: 21

Eritrea, officially called the State of Eritrea, is a country located in the Horn of Africa. Eritrea’s corruption is deep rooted. The government size is big and it regularly intervenes in the private sector which opens numerous ways for corruption especially considering the fact that the government is authoritarian.

17. Iraq

CPI Index Score: 21

Iraq is an Arab country that has been mired in violent conflict since the US invasion in 2003. The invasion dismantled the dictatorial and authoritarian Ba’athist regime but the development of an insurgency led to destabilization of the country. A war weakened and distracted government coupled with weak institutions allowed corruption to flourish in the country. According to a CNN report, Iraqi President Barham Salih stated that Iraq has lost $150 billion in corruption related practices since 2003.

Companies like Bank of America Corporation (NYSE: BAC), Amazon.com, Inc. (NASDAQ: AMZN), Lockheed Martin Corporation (NYSE: LMT), Alphabet Inc. (NASDAQ: GOOG) and JPMorgan Chase & Co. (NYSE: JPM) are deterred from opening business facilities in Iraq in order to make sure the investor confidence is intact and not shattered by concerns of corruption prevailing in Iraq.

16. Afghanistan

CPI Index Score: 19

Afghanistan is located in south-central Asia. The country has been experiencing violent conflict for 40 years.

15. Burundi

CPI Index Score: 19

Burundi is another African country to have made it to the list of 25 most corrupt countries in the world. Burundi is known for widespread corruption in its society as well as the government.

14. Republic of Congo

CPI Index Score: 19

Congo, officially called the Republic of Congo, is yet another African country to make it to the list of 25 most corrupt countries in the world. The country suffers from deep seated corruption in society as well as the government.

13. Guinea Bissau

CPI Index Score: 19

Guinea Bissau is a country located in West Africa. It is another African country to make it to the list of the 25 most corrupt countries on the planet. Corruption in the country is among the highest levels in Africa. A transparency report paints a stark picture of corruption, mismanagement and lack of accountability in the country. The report highlights lack of sufficient judicial resources to handle cases as well as rampant corruption in security forces related to arms and drugs smuggling. The public information for citizens is virtually impossible to access and a good chunk of citizens surveyed, claimed they have experienced at-least one instance of bribe request by public officials.

12. Turkmenistan

CPI Index Score: 19

Turkmenistan is a landlocked country in Central Asia. Corruption is prevalent in both the public and private sectors in the country.

Companies like Bank of America Corporation (NYSE: BAC), Amazon.com, Inc. (NASDAQ: AMZN), Lockheed Martin Corporation (NYSE: LMT), Alphabet Inc. (NASDAQ: GOOG) and JPMorgan Chase & Co. (NYSE: JPM) are deterred from moving to countries like Turkmenistan out of fear of losing investor confidence due to the corruption prevailing in the country.

11. Democratic Republic of Congo

CPI Index Score: 18

Democratic Republic of Congo (not to be confused with the Republic of Congo) is an African country and is known to be deeply embroiled in corruption. Transparency International reported that 80% of service users in the country have admitted to paying a bribe in the previous year.

10. Haiti

CPI Index Score: 18

Haiti is a Caribbean country known for widespread corruption by both public and private sector officials.

9. North Korea

CPI Index Score: 18

North Korea, officially called the Democratic People’s Republic of Korea, is a country in the far east of Asia. It is ruled by a dictatorial totalitarian regime with people having little to no access to the outside world. The public information by citizens is also nearly impossible to access which opens the doors for widespread corruption.

8. Libya

CPI Index Score: 17

Libya is a war torn country in Africa which saw the overthrow of the dictatorial regime during the Arab Spring, following which, the country was caught in a civil war with different factions controlling different parts of the country. The turmoil has caused corruption to soar in a country that already had very weak political institutions. Major types of corruption involve smuggling of oil in black market by public officials and bribery for settlement of judicial cases among others.

7. Equatorial Guinea

CPI Index Score: 16

Equatorial Guinea is another African nation to make it to the list of 25 most corrupt countries on the planet. The country is practically ruled by a powerful oligarchy in an authoritarian way opening the floodgates of corruption.

6. Sudan

CPI Index Score: 16

Sudan is another African country to end up on the list of the 25 most corrupt countries on Earth. Corruption in Sudan is widespread in both public and private spheres.

Click to continue reading and see the 5 Most Corrupt Countries in the World.