Article

 

A Dynamic Analysis of Country Clusters, the Role of Corruption, and Implications for Global Firms (p.33-60)

by

Grein Andreas, Baruch College, CUNY

Sethi S. Prakash ,

Tatum Lawrence G. ,

Keywords : Economic development, Corruption, Country clustering

JEL classification : F23, M16, O17

Abstract

Country clustering has been explored as a technique for reducing the complexity and exploring relationships between countries. Rather than examining country level indicators in isolation, clustering offers the opportunity to determine which countries are similar and explore the relationships between variables driving cluster membership. We examine 39 countries using economic, technological, cultural, demographic and quality of life variables. Corruption is captured using Transparency International’s corruption perceptions index (CPI). The data cover the years 1995, 2000, and 2005. Principal components analysis reveals 3 factors, and the role of CPI (in terms of eigen weightings) is relatively stable over the period studied. Using factor scores for clustering, we observe cluster membership differences across years and note that diverging CPI scores are associated with countries that appear to be growing more similar.