Improving the Investment Climate in Croatia • Evening for Safe Steps ...

News&ViewsTransparency International defines corruption as the abuseof entrusted power for private gain. This definition encompasses corruptpractices in both the public and private sectors. The CorruptionPerceptions Index (CPI) ranks countries according to the perceptionof corruption in the public sector. The CPI is an aggregate indicatorthat combines different sources of information about corruption, makingit possible to compare countries.highest ever score of 4.4 being achieved in 2008. The goal for Croatiais to achieve a score of at least 5 and above because in countries withscores of 5 and above, corruption is no longer considered to threatenfurther economic development and society in general.There is a direct correlation between corruption and ForeignDirect Investment (FDI). Every one point increase in the CPI scoreresults in an increase in FDI of 0.5% of GDP and a rise in averagereportDecrease in Corruption = Increase in FDIby Don Markušić, Barrister & Solicitor, President of AmCham,Board Member of Transparency InternationalThe 2010 CPI draws on different assessments and businessopinion surveys carried out by independent and reputable institutionssuch as the Economist Intelligence Unit, the Bertelsman TransformationIndex, the Institute for Management Development and the WorldEconomic Forum Global Competitiveness Report. It captures informationabout the administrative and political aspects of corruption.Broadly speaking, the surveys and assessments used to compile theindex include questions relating to bribery ofpublic officials, kickbacks in public procurement,embezzlement of public funds, andquestions that probe the strength and effectivenessof public sector anti-corruption efforts.Perceptions are used because corruption– whether frequency or amount – isto a great extent a hidden activity that is difficultto measure. Over time, perceptions haveproved to be a reliable estimate of corruption.Measuring scandals, investigations or prosecutions,while offering ‘non-perception’ data,reflect less on the prevalence of corruption ina country and more on other factors, such asfreedom of the press or the efficiency of thejudicial system. Hence, the many individualcorruption scandals that have surfaced inCroatian in the past 12 months prior have hada minimal effect on this year’s Index.Croatia scored 4.1 on TransparencyInternational’s Corruption Perception Index for2010 on a scale of 0 (total corruption) to 10(absence of corruption) which is exactly thesame score as for the previous year. Croatiaalso had this same score of 4.1 in 2007 with its ››› XXXXincomes of up to 4%. By fighting corruption we are in effect working toincrease Foreign Direct Investment.AmCham’s cooperation with other organisations again provedfruitful when Dr. Huguette Labelle, Global President of TransparencyInternational agreed to be guest speaker at our AmCham lunch duringher to Croatia in July 2010 when she also met with President IvoJosipović and Prime Minster Jadranka Kosor.8 ISSUE 4/2010