An Analysis of Financial Corruption Index (FCI) in Iran Through Deprivation Theory

Document Type : Research Article

Authors

1 PhD Student in Public sector Economics, Department of Economics, University of Tehran, Kish International Campus, Kish, Iran

2 Professor, Department of Economics, Faculty of Economics, University of Tehran, Tehran, Iran

3 Senior Economist, Canadian centre for Health Economics, University of Toronto, Toronto, Canada

Abstract

For many years, the economics of corruption has been widely used from political perspective. Scholars identified many variables and determinants of corruption; yet, one could hardly find a comprehensive index of financial corruption that provides a more precise picture of its impacts on the political and economic system. Financial corruption is a hidden variable that cannot be properly observed and measured. Corruption studies face with the conceptual and measurement issues. Most researchers, applied either limited items or some aspects of corruption to represent the entire of concept. Some indicators such as Corruption Perceptions Index (CPI), Corruption Control Index (CCI), etc. are based on expert’s and business executive’s understanding of corruption, instead of actual objective measurement of the phenomenon. Additionally, none of these indicators especially CPI, are adequate for the empirical research of the impact’s corruption on economic variables. To address these shortcomings, it is necessary to create a proper indicator designed to measure corruption. In this paper, we established a new comprehensive Financial Corruption Index (FCI) that has been framed based on “Deprivation Theory”, which measures the shortfall of the nation in each of economic dimensions including government expenditures, investment, income and economic freedom. Applying these four dimensions, in conjunction with a composite index approach to corruption, makes it feasible to create a novel framework for understanding of financial corruption.  The results show during 2007 and 2017, Iran saw its FCI rating increased from 0.475 to 0.535 from 2007 to 2017, which means an improvement in Iran’s rank from 87 in 2007 to 82 in 2017 among 126 countries. The CPI scores for Iran confirms that our results in FCI are valid and accurate. 

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References

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Journal of Applied Economics Studies in Iran
Volume 13, Issue 49
May 2024
Pages 155-179

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