Q1. Corruption Index: Conditions, Reasons and possible issues
Corruption could be defined as the dishonest and unethical behavior in order to access personal profit or exclusive power from political authorities instead of conducting corresponding laws, which could be an important indicator of political risk. In this case, corruption perception index will be used to estimate the scale of corruption. According to the Transparency International (2016), Sweden scores 89 in corruption perception index, which is the third highest within the 168 countries surveyed while Guatemala only scores 28, ranking 123 in 168 countries. These statistics indicate that Guatemala have a much larger scale of corruption, comparing to Sweden.
The reasons for the huge difference in corruption performance might be varied. From economic perspective, it could be argued that the differences between Guatemala and Sweden’s income and income equality might be one of the reasons since the higher level of productivity and fairer resource distribution might lower the motivate for corruption. For …show more content…
With a highly efficient political and legal system, Sweden could avoid corruption and political instability in most cases and keep a low political risk. However, Sweden’s political risk still exists due to fiscal policies change. For instance, Sweden government announced that energy taxes will be risen in 2016 budget (Government Offices of Sweden, 2015), which could increase the cost of investing in Sweden and lower the return of investment. Different from Sweden, Guatemala has higher political risk since it has serious problems in corruption and legal systems. For instance, the former Guatemala president was arrested due to his corruption and bribery behaviors (Lakhani, 2015), which shows that Guatemala is highly corrupted and investors should face more return risk due to possible bribery
Corruption could be defined as the dishonest and unethical behavior in order to access personal profit or exclusive power from political authorities instead of conducting corresponding laws, which could be an important indicator of political risk. In this case, corruption perception index will be used to estimate the scale of corruption. According to the Transparency International (2016), Sweden scores 89 in corruption perception index, which is the third highest within the 168 countries surveyed while Guatemala only scores 28, ranking 123 in 168 countries. These statistics indicate that Guatemala have a much larger scale of corruption, comparing to Sweden.
The reasons for the huge difference in corruption performance might be varied. From economic perspective, it could be argued that the differences between Guatemala and Sweden’s income and income equality might be one of the reasons since the higher level of productivity and fairer resource distribution might lower the motivate for corruption. For …show more content…
With a highly efficient political and legal system, Sweden could avoid corruption and political instability in most cases and keep a low political risk. However, Sweden’s political risk still exists due to fiscal policies change. For instance, Sweden government announced that energy taxes will be risen in 2016 budget (Government Offices of Sweden, 2015), which could increase the cost of investing in Sweden and lower the return of investment. Different from Sweden, Guatemala has higher political risk since it has serious problems in corruption and legal systems. For instance, the former Guatemala president was arrested due to his corruption and bribery behaviors (Lakhani, 2015), which shows that Guatemala is highly corrupted and investors should face more return risk due to possible bribery