Corruption’s Newsworthy Economic Embrace
The IMF, which regularly includes difficult to assess anti-corruption steps in its programs as in Ukraine’s required court setup, published research for the first time with historic “big data” news article collection to correlate trends with economic and financial performance. It is defined as “public office abuse for private gain,” and development agencies and interest groups have created indicators and indices over decades to flag direction, such as the Transparency International ranking. These expert measures broadly score institutional and regulatory capacity to promote integrity but are based on perceptions rather than hard statistics which the study’s compendium of over 650 million global articles may help to foster in a descriptive model. The data base shows asset price and macro growth, policy and capital flow effects to underscore background literature on the subject describing fiscal and monetary instability and business and finance trust erosion. Previous efforts have used news coverage and social media posts to track relationships, but not in a comparable diverse sample with the accumulated information dating back to the 1980s subject to numerous frequency and vetting algorithms. However the framework is limited by different approaches to press coverage and freedom and cultural norms surrounding corruption and refinements incorporate related Freedom House and other yardsticks to redress the gap. The results reflect “major turning points” and close association with traditional breakdowns. The news flow index is higher for developing versus advanced economies, but low-income countries had “large improvement” in recent years. For emerging markets capital inflows were pronounced even as mentions spiked since the financial crisis a decade ago. Nonetheless big shocks generated long-run investor changes, and the media work tracked established institutional quality benchmarks published by the World Economic Forum and World Bank. Case illustrations link deterioration to lower per capita growth and stock market values, increased sovereign borrowing costs, currency depreciation and falling direct investment. These relationships are tighter for developing countries, and lasting benefit from anti-corruption progress must be followed with actual investigations and corrective action beyond popular attention.
The Fund looked at experience in Indonesia, Malaysia and Singapore and found that after setting up an anti-corruption commission with passage of an enabling law in the early 2000s this coverage has prevailed for a better reputation. Malaysia’s record is better with many initiatives such as on whistleblower protection beyond formal statute. Singapore’s most stringent strategy is “holistic” both in legal and enforcement terms, and pays high-level public officials a salary premium to reduce bribery odds. The paper notes that information technology is more common in detection and probing and that technical assistance could leverage the news index tool for greater impact. Fragile states may benefit in particular as they work from a minimal foundation to set long-range vision, and future research should further classify shock taxonomy and examine regional and income level distinctions. Ukraine will soon have the chance to produce more news with candidates, including previous corruption defendants, scrambling ahead of presidential elections with so-called “odious debt” repayment to Russia from the former ousted kleptocrat regime an enduring headline issue.