Rethinking global rankings: Moving beyond one-size-fits-all metrics

On April 24, early registration to the largest anti-corruption event of the year opened. Almost 30 years ago, in 1995, Transparency International published the first Corruption Perception Index (CPI). Since then, the organization has ranked countries and territories based on the perception of public sector corruption. Investors and multinational companies use the CPI and other global indices to make decisions on whether or not, and how much, to invest in a country. Since CPI’s first publication, the following seven countries have consistently ranked near the bottom of the index: Somalia, South Sudan, Syria, Yemen, Venezuela, Sudan, and Afghanistan while Denmark, New Zealand, Finland, Sweden, Switzerland, Norway, and Singapore have ranked near the top.

What’s particularly interesting is that these same countries rank near the top and bottom of most global indices that measure national progress. For example, over the past decade, Norway, Denmark, Switzerland, Sweden, Finland, Netherlands, and New Zealand have ranked near the top of the Legatum Prosperity Index. Alternatively, Central African Republic, Yemen, Chad, Sudan, Syria, Zimbabwe, and Burundi have been near the bottom. 

Assess most global rankings and you’ll find that wealthy countries are at the top while most poor (or war torn) countries are at the bottom. In no ranking is there a poor country at the top or a wealthy country near the bottom. Some countries move up and down a few spots, but rarely do the rankings change in any significant way. This should tell us a few things. 

First, the value we get from these annual rankings is marginal as there is little to no fundamental change in the rankings while the cost to develop these rankings likely involve a substantial investment of financial and human resources. Second, we can already predict what future rankings would resemble based on what these rankings choose to measure. A nation’s education, healthcare, infrastructure, security, bureaucratic efficiency, and other parameters do not change significantly from year to year. These things take time. Lastly and, perhaps, most importantly, these rankings don’t measure factors that can actually provide insights on the progress many countries are making.

What should the rankings include?

First, it’s clear that money makes a significant difference. Since no rich country finds itself at the bottom and no poor country finds itself at the top, rankings need to begin measuring government expenditure per capita. Consider the fact that the national government expenditure per capita (how much each government budgets to spend annually divided by the population) is vastly different between rich and poor countries. 

Rich-country (countries near the top of rankings) government expenditure per capita

Poor-country (countries near the bottom of rankings) government expenditure per capita

Source: Country’s national budget, 2022

How can Burundi–where the government spends $93 per person annually–possibly compete on the same level, using the same metrics, and with the same expectations as Norway, where the government spends more than $40,000? Not only does Norway have more money to spend on its infrastructure, institutions, and fighting corruption, but Norway can borrow money from the capital markets at a much lower rate than Burundi. Simply putting both countries on the same indices seems unhelpful and insensitive to the struggles of Burundians. 

Second, these rankings should start to measure the proportion of the economy that is formal and informal (or what I like to call, independent). The vast majority of wealthy economies at the top operate in the “formal economy.” This portion of the economy contributes to taxes, has better and cheaper access to financial services, and also has legal protections and social security. Those in the independent economy have no such access and thus, have a much harder time contributing to the tax revenues of a country. So, not only are countries such as Burundi and Somalia starting from a lower base, but also their ability to increase their revenues and transform their economies is hampered by the formal/independent economic makeup. 

Rich-country (countries near the top of rankings) formal economy makeup

Poor-country (countries near the bottom of rankings) formal economy makeup

Source: International Labor Organization

Third, these rankings should begin to measure how long countries have been practicing democracy from the time of the country’s last coup. Unfortunately, many countries at the bottom of these global rankings have not been practicing democracy long enough to get very good at it. Research from Nauro Campos at University College London confirms this and asserts that countries starting their democracy journey often struggle. His research finds that, “on average, countries lose 20% of GDP per person in the 25 years after escaping dictatorship relative to their previous growth path, in part because many struggle with the transition to democracy.”

For global rankings such as the Transparency International Corruption Perception Index, World Economic Forum’s Global Competitiveness Index, and the United Nations Human Development Index and many others to become more helpful, they should consider integrating these metrics in their rankings–government expenditure per capita, formal and independent economic makeup, and length of democracy since last coup. These would further legitimize the rankings and better reflect the realities of national progress and performance.