Corruption Around the World: Evidence from a Structural Model

The causes and consequences of corruption have attracted much attention in recent years by both academics and policy makers. Central in the discussion on the impact of corruption are perception-based indices. Recent research has shown that perceived corruption might not be a good indicator of actual corruption in a country. In this paper, we employ a structural equation model—that treats corruption as a latent variable that is directly related to its underlying causes and effects—to derive an index of corruption. The index of corruption is derived for approximately 100 countries over the period 1976-97.