Control Risks Group and Transparency International published findings of their research on comparative international risks for business andperceived corruption level, rating Ukraine as a country with medium political and security risks, and just below the median on the Corruption Perceptions Index (CPI).
The two organizations made almost simultaneous announcements that their annual reports are now available to the public, giving a good snapshot of important business environment factors facing international business throughout the world. Control Risks Group published its report on Nov. 7, 2006. Transparency International released its report on Nov. 6, 2006.
Control Risks divided 198 countries surveyed into five groups depending on the level of risk for businesses, namely extreme, high, medium, low, and insignificant. Two types of risk measured were presented in the press release: security risk and political risk. For both categories, the RiskMap 2007 places Ukraine among medium-risk countries or countries with areas at medium risk.
Transparency International (TI) ranked 163 countries by the 2006 Corruption Perceptions Index (CPI) score. CPI is measured “on a scale from zero to ten, with zero indicating high levels of perceived corruption and ten indicating low levels of perceived corruption,” according to TI’s press release. With the score of 2.8, Ukraine is within a group of countries occupying places 99 to 104 on the list.
Ukraine has a long way before it can be compared with such countries as Finland, Iceland, and New Zealand, which have scored 9.6 points on the CPI scale, and can be found among the world’s leaders on the RiskMap as well. Much more useful will be comparisons with countries of the former Soviet bloc in Europe and the Commonwealth of Independent States.
None of these countries can boast of insignificant risk for businesses, either in the security category or political category. But equally important, none of these countries features extreme risks, according to the Map.
Let’s give each of the countries one point for being in a high risk group, two points for being in a medium risk group, and three points for being in a low risk group. Summing up points for security and political risks will give us a risk score of each country.
As can be seen from the above charts, Ukraine keeps close to the middle, though on the wrong side, among all countries of both the former Soviet bloc and the former Soviet Union. However, it is clearly one of the leaders in the Commonwealth of Independent States.
The situation with the 2006 CPI score is quite similar:
Regarding the level of perceived corruption in Ukraine, there is room for optimism: the CPI score over three last years has been steadily growing, from 2.2 to 2.8, as was Ukraine’s rating among its former “sister republics” (cf. charts below).
As an advantage for Ukraine in competing for foreign direct investments, its two next-door neighbors in CIS, Belarus and Russia, has worsened their CPI standing over the same period.
Control Risks, according to its web site, is an “independent, specialist risk consultancy with 18 offices on five continents.”
Transparency International on its site calls itself a “global civil society organization leading the fight against corruption.”