International Careers Program Topic: Sudan, CPI VS GCI Correlation between the years 2003, 2005, 2010 &

2011

Mariuxi Castro Sanchez

Cultural Factors in International Business

Samborondn, 3rd, June, 2013

Sudan, CPI VS GCI Correlation between the years 2003, 2005, 2010 & 2011. Mariuxi Castro Sanchez
Abstract In order to perform a comparative analysis; which could open the possibility to determine the status of correlation of various countries; this essay was based in two main axes. These are CPI (Corruption Perception Index) of each of the countries and their GPI (Global Competitiveness Index). In addition; this analysis will be determined within Timeline 2000, 2005, 2010 and 2011 in order to assess the variations that have existed during these periods. As we briefly mentioned before; in order to perform this analysis; it was previously selected four countries from different continents such as African, American and European one; but without neglecting Sudan as principal axis. The objective of the implementation of dispersion diagrams was to determine the regressions in the differentiation of correlations; making it possible to conclude that Sudan has presenting a negative trend in terms of competitiveness growth and fighting corruption because of factors like civil wars and division of the country. Key words: Corruption perception index, Sudan, Middle East & North Africa, Correlation; Global Competitive Index, Third World Countries, Tendency, Spot, Score. Introduction: As everybody knows; today we lived in a globalized world. There are no more boundaries to communicate with the societies in other continents. Similarly; it is clear the tendency of the human being in knowing everything that surround it. Thus; it has appeared the need to measure every aspect of the countries around the world in order to analyze their economic and social situations and development along the years. One of those analyses has to be with the poverty or wealthy within
2

a country based on its political system; its economic growth and the division of classes within its society. These aspects among others are relevant factors in order to divide the countries in developed or developing countries based on their competitiveness level; social stratification and degree of economic development. In addition, there are negative factors that influence the analysis of a country and frame it within a developing or third world country. These negatives are for example; a high level of corruption, social discrimination or low measured level of competitiveness. Therefore in order to understand the behavior of the countries based on those factors non- governmental organizations through institutions created by them; started to measure the level of corruption and competitiveness within the society of a country in order to determine which is the poorest or the richest one. So, this essay will analyze the reports and statistics of those institutions in order to cover its principal topics which are the CPI (Corruption Perception Index) and the GCI (Global Competitiveness Index). However, before going deeply in the analysis of the indexes mentioned before; we have to understand the basis of those terms. Therefore, we have to direct our attention to comprehend what is the corruption itself. Thus, this concept could be defined as: the practice of making abuse of power, function or media to obtain an economic or other kind of advantage (definicion.de). In addition; the corruption could be divided in different classes which could be defined like:Extortion, Bribery, Embezzlement, Collusion, Fraud, Influence Trading and even Lack of ethics (Correa). Thus, it was created the called CPI or Corruption perception Index. But what is the Corruption Perception Index or how it is calculated? Well the Corruption Perception Index ranks countries according to perception of corruption in the public sector. The CPI is an aggregate indicator that combines different sources of information about corruption, making it possible to compare countries

(Transparency International, 2010). This index actually looks to reflect the points of view of observers around the world who could expertise the analyzed factors. However, this institution mentions that this Index is only based in perceptions because the corruption is almost always related with illegal and hidden actions. So, the Transparency International Organization explains this situation as follows: Perceptions are used because corruption whether frequency or amount is to a great extent a hidden activity that is difficult to measure. Over time, perceptions have proved to be a reliable estimate of corruption. Measuring scandals, investigations or prosecutions, while offering non-perception data, reflect less on the prevalence of corruption in a country and more on other factors, such as freedom of the press or the efficiency of the judicial system. The CPI is therefore one of many TI measurement tools that serve the fight against corruption. (Transparency International, 2010) Finally, in order to totally comprehend this topic we have to understand where its data and sources come from and how it is calculated. The organization says: The CPI draws on data sources from independent institutions specializing in governance and business climate analysis. The sources of information used for the CPI are based on data gathered in the past 24 months. The CPI includes only sources that provide a score for a set of countries/territories and that measure perceptions of corruption in the public sector. (Transparency International, 2012) Thus, the calculation method used to obtain this index is divided into three steps. The first one is standardize the data provided by the individual sources (that is, translate them into a common scale); using matching percentiles technique that takes the ranks of countries reported by each individual source

(TRANSPARENCY INTERNATIONAL, 2010). The second step is based on increasing the standard deviation of the analyzed countries in order to differentiate those ones that could have similar scores.

Finally, the third step in the most simple of all; because it is consist in a obtaining a simple average of all the standardized values (TRANSPARENCY INTERNATIONAL, 2010) that has been got as results of the calculations. As the second item within the theoretical framework of the essay and having been analyzed the CPIs Concept; it is necessary to analyze the other side of the coin to support the proposed analysis. It means the Global Competitiveness Index (GCI). But, we cant analyze this index without knowing what competitiveness is. Therefore, in order to answer this query it was decided to define it as: The productivity with which a nation utilizes its human, capital and natural resources. To understand competitiveness, the starting point must be a nations underlying sources of prosperity (Rubiralta, 2005). In addition, the productivity of a country; important factor to obtain its competitiveness depends on values of the units of goods and services plus the prices that they could offer in any market; without putting aside the ability and quality provided by a society in terms of production which is reflected within the products it offers. Therefore; in order to measure all those factors The World Economic Forum created the index called the Global Competitiveness Index published in yearly Global Competitiveness reports. But what is the GCI? Well, according to the World Economic forum it is defined as the index that compares countries' productivity and efficiency and highlights their comparative advantages and the advisability of investing in them. The index examines the efficiency of different sectors of the national economies and their contributions to the country's productivity. It is useful because it identifies the strengths and weaknesses of national economies (The Reut Institute, 2006). The calculation of the GCI is based on three pillars which are basic requirements, efficiency enhancers and innovation and sophistication (The Reut Institute, 2006). Those sources are obtained from the International Monetary Fund and managerial surveys and measured in order to obtain the ciphers that will allow

ranking the countries according to them. While more higher the cipher; calculated from 0 to 10; more competitive the country is. All these statistical indicators are used to obtain another data called the correlation analysis which is: The set of statistical techniques used to measure the strength of association between two variables. The main objective of correlation analysis is to determine how intense the relationship between two variables. Usually the first step is to display the data in a scatter plot (Garca, 2005). But, in the case of the analysis proposed we will use as variables the index mentioned before. It means the CPI and GCI Indexes. Methodology: In order it has been determined that taking the sample and the results; it could be implemented a quantitative and qualitative analysis because of the amount of information obtained from non-governmental organizations. They has provided us with the necessary to perform the correlation analysis mentioned before. So, in order to perform it we will take as a basis the analysis done to Sudan in the Sudan: Economic and population analysis from 1998 to 2011 (Castro Sanchez, 2013) where was determined the problems of this country according to the civil wars and lack of education in its suffering currently. Therefore in order to continue the same trend; it has been selected four more countries within the African continent to make a comparison not only of the growth of the competitiveness and corruption along the years but to determine which country presents the higher scores within the mentioned indexes. Then, it was selected to countries of the European continent with the higher scores in this zone. Finally, two more countries from America were selected in order to compare the difference between three countries in terms of competitiveness and corruption and have the possibility to analyze if the location of the hemisphere and the difference of companies have any influence on the figures showing these indices. In addition; it was selected a specific time line in order to determine the evolution of these factors in the last decade. Thus, the years 2000, 2005, 2010 and
6

2011 were selected to evaluate the variances of the indicators produced by every country in each one of the years. All these data will be organized in the following form: In the x axis will be located the ciphers that describe the CPI of the ten analyzed countries. This axis goes since 0 to 10; it means while higher the score, cleaner the country is. In the other hand, the y axis collects the data obtained from the GCI in a 0-10 scale and similarly to the CPI while higher the rank; more competitive the country is. Results: The data is presented in dispersion and regression table; which allow us to interpret not only qualitative but quantitatively the data in order observe the measured variations along the years presented by the countries. Besides the growth of the analyzed factors can be interpreted too; in order to propose an efficient idea that could works as a useful solution idea. 1. CPI VS GCI Correlation Analysis 2003 2005

Source: Global Competitiveness Report 2003 - Global Competitiveness Report 2005

This table collects the data of the countries mentioned before within the years 2003 and 2005. In this specific case; it was selected the year 2003 because the years before to it the African countries were not considered to calculate the

mentioned indexes. Therefore; it was selected the report of the year 2003 which was the year where most of the African countries were included in the analysis. As we can see; most of the analyzed countries has maintained a similar trend. In the case of the African countries they have maintained very low scores within those years and reveal a similar situation in terms of competitiveness. According to the table, Sudan is the most corrupt African country; having lowers scores than Egypt, Ethiopia, Kenya and Libya. The European countries show a totally different situation. Denmark, Norway and Sweden could be easily located in the highest ranks in terms of competitiveness and corruption. The surprise came from the Central-American countries which in the case of the Salvador presents a really acceptable score compared to Guatemala and the African countries. These countries have similar economic growth but it is clear that the country of El Salvador has actually done a better effort in terms of development. 2. CPI VS GCI Correlation Analysis 2010 2011

Source: Global Competitiveness Report 2010 - Global Competitiveness Report 2011

As we can observe in the table and similar to the previous table; the African countries has improved their situations in a small proportion. In terms of corruption; Sudan has become one of the ten more corrupt countries in the world (Nikolaev, 2010). It means that its score has totally decreased in comparison to the results
8

presented in the previous table. In terms of competitiveness the situation has not changed a lot; maintaining a similar tendency of growth. In contrast, the European countries have maintained the same trend. It means that their governmental systems have fulfilled the needs of their societies in terms of anti-corruption and competitiveness. In the case of the Central-American Countries; it is like the situation has been inverted. Now, Guatemala presents a considerable growth within the analyzed indexes; but El Salvador has revealed a decreasing trend compared to the scores analyzed before.
3. Correlation Graph CPI VS GCI Between the Years 2003, 2005, 2010 & 2011

Source: Global Competitiveness Report 2003-2011 Corruption Perception Index 2003-2011

In this scatter graph are organized the data presented in the previously analyzed tables. As we can observe there are countries that are located at the very beginning of the trends in every line. It means that most of the analyzed countries
9

have a high corruption score but a low competitiveness rank. So, we can say that countries like Egypt and El Salvador that are presented nearly half of the lines are developing countries which has reduced their corruption scores and improved it competitiveness along the years. In contrast to this situation; we observe the European countries which are located at the ending of the lines. It means that they have maintained high competitiveness and anticorruption scores. The situation is clear; the African countries are still suffering of severe economic and social problems which make them impossible an acceptable growth.
Discussion and Conclusion:

Once it has been made the statistical analysis corresponding to the data within the showed tables; it is necessary to interpret their results in order summarize them and issue a scientific conclusion based on the lines of corruption and competitiveness. Although the early years of the millennium were years of changes in the world; the African countries have lived a similar situation for many decades. Extremely poverty, corruption, social discrimination, AIDS and other issues has been the relevant factors submerged in these societies. We can see this situation reflected in the scores presented by Sudan which despites having oil production; in terms of competitiveness it shows a very slow growth in comparison to countries like Egypt located in the same region. Much of this economic and political stagnation has to be with factors like a constant civil war which has punished the Sudanese society for decades. In addition, the division of the country in two different parts has represented a totally division of its economy and obviously a decreasing in terms of economic growth. Finally, it has to be mentioned the corruption factor in Sudan; which has actually fed one of the problems that makes impossible the development of the country.

10

The high corruption has promoted the civil wars within the Sudanese society with situations like weapons and money traffic as we analyzed in Sudan: Economic and population analysis from 1998 to 2011 (Castro Sanchez, 2013). However; it is necessary to highlight situations like presented by Egypt which s revealing a considerable growth which will locate the country within the developing countries in a near future. It means that the solutions could be applied but sometimes it is necessary a radical change within the mind and will of the societies. For almost two decades the African countries have been considered as Third World Countries. Nowadays, we can see that a developing range could be applied in these countries. In the case of Sudan, there is a long path to walk. Therefore; radical changes need to be applied in order to start to walk. It is true that the country lived a little prosperity time because of the petroleum revenues; however, it didnt last long because of the division of the country. Being clearly that the reason of the separation of the South Sudan; the social differences and problems that were mentioned above. Therefore; if the continues that decreasing trend without taking any action; its economy will be serially impaired and sadly, the country will have to live in the circle of the Third World country.

11

Bibliography Axular.org. (10 de 08 de 2011). Axular.org. Obtenido http://www.axular.org/webguneak/haurralde/angola/Angola.pdf

de

Axular.org:

Castro Sanchez, M. (12 de 05 de 2013). Sudan: Economic and population analysis from 1998 to 2011.. Samborondon, Guayas, Ecuador. cia.gov. (07 de 05 de 2013). Recuperado el 12 de 05 de 2013, de https://www.cia.gov/library/publications/the-world-factbook/geos/su.html CompetitividadInternacional. (30 de 10 de 2011). CompetitividadInternacional. Obtenido de CompetitividadInternacional: http://www.competitividadinternacional.org/ Correa, K. D. (s.f.). monografias.com. Obtenido http://www.monografias.com/trabajos88/la-corrupcion-politica/la-corrupcionpolitica.shtml CPI. (10 de 01 de 2013). CPI. http://www.transparency.org/research/cpi/overview Obtenido de de

CPI:

definicion.de. (s.f.). Obtenido de http://definicion.de/corrupcion/ DiarioUno. (20 de 04 de 2010). DiarioUno. Obtenido de http://www.diariouno.com.ar/edimpresa/2010/04/20/nota241263.html DiarioUno:

EconomiaContemporanea. (31 de 10 de 2012). EconomiaContemporanea. Obtenido de EconomiaContemporanea: http://ecocontemporanea.blogspot.com/ Ehistoriador.es. (10 de 01 de 2012). Ehistoriador.es. Obtenido de Ehistoriador.es: http://www.elhistoriador.es/religiones.htm Fundesa. (10 de 11 de 2012). Fundesa. Obtenido de Fundesa: http://www.fundesa.org.gt/cms/es/indices-internacionales/percepcion-decorrupcion.html Garca, S. B. (11 de 2005). monografias.com. Recuperado el 03 de 06 de 2013, de http://www.monografias.com/trabajos30/regresion-correlacion/regresioncorrelacion.shtml Gerencie. (20 de 10 de 2012). Gerencie. http://www.gerencie.com/competitividad.html Obtenido de Gerencie:

GutierrezLimongi, J. (2013). Morocco: Economic and population analysis from 1998 to 2011. Guayaquil: UEES Cultural Factors In International Business.
12

indexmundi.com. (s.f.). Recuperado el 12 http://www.indexmundi.com/sudan/background.html

de

05

de

2013,

de

Nikolaev, S. (28 de 10 de 2010). periodista digital. Recuperado el 03 de 06 de 2013, de http://www.periodistadigital.com/tecnologia/internet/2010/10/28/diezpaises-mas-corruptos-del-mundo-los-diez-menos-corruptos.shtml Oficina economica y Comercial de Espaa en el Cairo. (12 de 2011). Gua pas: Sudan. oficinas comerciales.es. (s.f.). Recuperado el 12 de 05 de 2013 , de http://www.oficinascomerciales.es/icex/cda/controller/pageOfecomes/0,5310,52804 49_5296122_5296234_0_SD,00.html Rubiralta, A. (01 de 2005). iese.edu/en. Obtenido http://www.iese.edu/en/ad/anselmorubiralta/apuntes/competitividad_en.html sudan.net. (12 de 05 de 2013). Obtenido de http://www.sudan.net/about.php The Reut Institute. (12 de 2006). Global Competitiveness Index. TocManagement. (10 de 05 de 2011). TocManagement. Obtenido de TocManagement: http://www.tocmanagement.com/index.php?option=com_content&view=article&id= 64&Itemid=81 Transparency International. (2012). Recuperado el 03 de 06 de 2013, de http://cpi.transparency.org/cpi2012/in_detail/ Transparency International. (2010). CORRUPTION PERCEPTIONS INDEX 2010. TRANSPARENCY INTERNATIONAL. (2010). http://cpi.transparency.org/cpi2012/in_detail TRANSPARENCY INTERNATIONAL. (s.f.). http://cpi.transparency.org/cpi2012/in_detail transparency. Obtenido de de

transparency.org.

Obtenido

de

Transparency International. (2011). transparency.org. http://www.transparency.org/cpi2011/in_detail#myAnchor4

Obtenido

de

TRANSPARENCY iNTERNATIONAL. (2011). transparency.org. Obtenido de http://www.transparency.org/cpi2011/in_detail#myAnchor4 TRANSPARENCY INTERNATIONAL. (2011). transparency.org. Obtenido de http://www.transparency.org/cpi2011/in_detail#top

13

UnitedNations. (10 de 10 de 2012). UnitedNations. Obtenido de UnitedNations: http://www.unodc.org/lpo-brazil/es/corrupcao/index.html WORLD BANK. (12 de 2012). Sudan Country Economic Brief. WORLD BANK. (s.f.). worldbank.org. Recuperado el 12 de 05 de 2013, de http://search.worldbank.org/all?qterm=sudan World Economic Forum. (2010). Global Competitiveness Report . World Economic Forum. (2011). Global Competitiveness Report 2011.

14