Corruption levels are worsening across emerging markets and pose a real danger to the sustainability of economic growth, reckon ECR analysts
Corruption poses the largest risk to businesses investing in emerging markets, according to the Euromoney Country Risk Q1 2013 results. The alarming level of corruption across emerging markets could bring an abrupt halt to investment inflows and poses a substantial risk the sustainability of economic expansion in emerging markets.
The fact that emerging markets continue to see rapid economic growth, as corruption levels grow reveals that investors are often willing to turn a blind eye to malpractice for the sake of higher return and growth. But is this trend sustainable? Or will government and businesses in emerging markets have to re-think their practices?
ECR data reveals that rising corruption levels are negatively impacting on economic growth. Corruption scores for emerging markets declined by an average of 1.2 points, to 3.9 points (out of 10) between 2011 and 2013. This versus an average corruption score of 7.3 points for the OECD countries.
Meanwhile, economic outlook scores for emerging markets deteriorated by 1.1 points, to 5.5 points over the two year period examined.