The mean value of the ICRG variables 'Corruption', 'Law and Order' and 'Bureaucracy Quality', scaled from 0 to 1. Higher values indicate higher quality of government.
Corruption:
This is an assessment of corruption within the political system. Such corruption is a threat to foreign investment for several reasons: it distorts the economic and financial environment; it reduces the efficiency of government and business by enabling people to assume positions of power through patronage rather than ability; and, last but not least, it introduces an inherent instability into the political process. The most common form of corruption met directly by business is financial corruption in the form of demands for special payments and bribes connected with import and export licenses, exchange controls, tax assessments, police protection, or loans. Such corruption can make it difficult to conduct business effectively, and in some cases may force the withdrawal or withholding of an investment. Although the measure takes such corruption into account, it is more concerned with actual or potential corruption in the form of excessive patronage, nepotism, job reservations, 'favor-for-favors', secret party funding, and suspiciously close ties between politics and business. According to ICRG, these insidious sorts of corruption are potentially of much greater risk to foreign business in that they can lead to popular discontent, unrealistic and inefficient controls on the state economy, and encourage the development of the black market. The greatest risk in such corruption is that at some time it will become so overweening, or some major scandal will be suddenly revealed, so as to provoke a popular backlash, resulting in a fall or overthrow of the government, a major reorganizing or restructuring of the country's political institutions, or, at worst, a breakdown in law and order, rendering the country ungovernable.
Law and order:
Law and Order are assessed separately, with each sub-component comprising zero to three points. The Law sub-component is an assessment of the strength and impartiality of the legal system, while the Order sub-component is an assessment of popular observance of the law. Thus, a country can enjoy a high rating in terms of its judicial system, but a low rating if it suffers from a very high crime rate or if the law is routinely ignored without effective sanction (for example, widespread illegal strikes).
Bureaucracy Quality:
The institutional strength and quality of the bureaucracy is another shock absorber that tends to minimize revisions of policy when governments change. Therefore, high points are given to countries where the bureaucracy has the strength and expertise to govern without drastic changes in policy or interruptions in government services. In these low-risk countries, the bureaucracy tends to be somewhat autonomous from political pressure and to have an established mechanism for recruitment and training. Countries that lack the cushioning effect of a strong bureaucracy receive low points because a change in government tends to be traumatic in terms of policy formulation and day-to-day administrative functions.
The component variables can be purchased at https://epub.prsgroup.com/products/icrg
Type of variable: Continuous
Downloaded by QoG on: 2024-01-29
Last updated by source: 2023-01-27
| Dataset | No. Countries |
|---|---|
| Basic cross-section: | 140 |
| Basic time-series: | 148 |
| Standard cross-section: | 140 |
| Standard time-series: | 148 |
| OECD cross-section: | 38 |
| OECD time-series: | 39 |
| Dataset | Available for years: |
|---|---|
| Standard time-series: | 1984-2023 |
| Basic time-series: | 1984-2023 |
| OECD time-series: | 1984-2023 |