What makes a country strong? Is it merely economic growth? Or are there factors that go beyond mere finance?
Also See Corruption and the Strength of Nations (Graphic)
It could possibly be all of them. However, there does appear to be some connection between economic strength and moral values. In fact, that is what one is led to believe if one looks at some of the numbers given in the table. The analysis covers the least corrupt companies as ranked by Transparency International, as well as five countries that are relevant to the emerging world order: the US (the wealthiest country in the world), China and India (the future engines of growth for the world), Russia (the dark horse which could still trump every other country), and Germany (the powerhouse of the European Union).
Look at the per capita gross domestic product (GDP) of each of these countries and then compare it with the purchasing power parity (PPP) GDP as well. The ratio between these two numbers points to the strength of the nominal GDP compared with PPP. It does appear that this ratio corresponds very closely to the corruption rankings as well.
In almost all the countries listed in the table, this does appear to be the case, except, may be, for Singapore, where the per capita PPP is higher than the per capita GDP, even though it ranks among the least corrupt countries along with Finland, Switzerland and Germany. Does that mean the Singapore currency is undervalued, which is why the PPP of this country is higher than the actual GDP in nominal terms?
Some economists believe that a higher PPP number (compared with GDP) could actually be a reflection of both corruption, which weighs down the local currency substantially, as well as the over-exploitation of labour. Thus, labour gets paid less in countries where PPP is higher (than GDP) than in countries where that is not the case. That, they say, is also a form of corruption where labour is not allowed to get its due, both in terms of wages as well as social security benefits, including decent medical support and schools.
Either way, India fares poorly on both the corruption index as well as the ratio of GDP to PPP. It appears to boil down to terribly poor governance, and a willingness to both exploit people and to squander their money.
Clearly, India’s policymakers have a lot of explaining to do.
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Poor governance? You bet it is
Suddenly, the taint of poor corporate governance is not merely on Satyam Computer Services Ltd, but also on the government of India. The focus is now on India’s public sector units that are listed. The government allowed them to get listed partly to raise funds as well as to push forward its liberalization agenda.