Culture, Corruption, and the Prospects for Change

CULTURE, CORRUPTION, AND THE PROSPECTS FOR CHANGE:

A STATISTICAL STUDY

Joseph I. B. Gonzales, Ph.D.

ABSTRACT

Corruption, linked theoretically and empirically to low levels of “democracy and governance,” and to economic underdevelopment, has been identified by leading international institutions as one of the principal, if not the foremost, economic problems of the Philippines. High levels of corruption in the Philippines have also been attributed to cultural factors. Using the World Values Survey (WVS) two-factor cultural construct, the study indicated strong associations between culture, corruption, and “democracy and governance” across various countries worldwide. A time series analysis forecasted gradual improvement in “democracy and governance” ratings and a slight decline in corruption ratings for the Philippines. The study affirmed that culture is strongly related to corruption in the Philippines. While individual political events and actors directly affect the political situation, the study, unfortunately, highlighted that any improvement is likely to be gradual. The relationship between culture and corruption in other countries warrants further investigation because of its implications for the case of the Philippines.

Rationale for the Study

Corruption is one of the principal economic problems of the Philippines. The Philippines in 2008 rated poorly on Transparency International's Corruption Perceptions Index (CPI), ranking 141 out of 180 countries. In March 2008, ADB released a 2007 report titled “Philippines: Critical Development Constraints” strongly linking corruption and political instability in the Philippines to its poor economic performance in the Asia Pacific region. The study concluded, “Instituting good governance should be a top development priority in the Philippines. Two issues stand out - fighting corruption and addressing political instability” (page 20).

Corruption is strongly related to the subject of “democracy and governance” and is often subsumed by it. Overwhelming evidence shows that a positive relationship exists worldwide between, on the one hand, low levels of corruption and good governance, and on the other, high levels of private investment, and economic growth and development. Vinod (2000), for example, demonstrated a direct relationship between corruption, and “democracy and governance,” specifically, that corruption is negatively correlated with the advancement of political rights and civil liberties, and the building and strengthening of democratic institutions.

High levels of corruption in the Philippines, resulting in economic underdevelopment, have been linked to cultural factors. Fallows (1987), for example, in the period immediately following the deposition of the dictatorial and corrupt Marcos regime in 1986, argued that the Philippines was afflicted with a “damaged culture,” a “failure of nationalism” engendered by the underlying deferential Malay culture combined with a deprecatory colonial history. The resulting low sense of national self-esteem and overriding sense of obligation to the narrow circle of family and “tribe,” he argued, led Filipinos to pursue their own selfish interests “to the ruination of everyone else.” Furthermore, “(t)here may be more miserable places to live in East Asia - Vietnam, Cambodia - but there are few others where the culture itself, rather than a communist political system, is the main barrier to development.”

Only recently has the relationship between culture and economic development come to the fore again as the subject of major empirical investigation in the social sciences. In the 1940s and 1950s, culture was a major topic of study in accounting for the varying political and economic development among different societies. Subsequently, in the 1960s and 1970s, academic interest in culture declined dramatically, only to be revived eventually in the 1980s; for example, an important work, “Underdevelopment is a State of Mind - the Latin American Case” by Harrison (1985), a former USAID official, was published. Using the case method, Harrison argued that in Latin America, culture had been the primary obstacle to development (Huntington, 2000).

This study aimed to investigate whether cultural factors are related to the high levels of corruption reported in the Philippines, resulting in economic underdevelopment. By contributing to the growing literature on the topic, the study sought to deepen the understanding of the relationship between culture and corruption, in general, and in the Philippines, in particular.

Moreover, this study was directed towards not only understanding the relationship between culture and corruption but also generating implications for action. During the 1999 symposium on Cultural Values and Human Progress held at the American Academy of Arts and Sciences in Cambridge, Massachusetts, participants agreed that value and attitude change should be integrated into development policies, plans, and programs in developing countries, and that a research agenda should be advanced to ground it. The reformist agenda advanced by symposium participants is upheld by this study.

This study also sought to investigate trends in “democracy and governance,” and corruption in the Philippines. Trends reveal prospects for change - for better or worse - in “democracy and governance,” and corruption in the Philippines.

Definition of Terms

Culture refers to the values, attitudes, beliefs, orientations, and underlying assumptions - “subjective culture” - shared among members of a society (Huntington, 2000).

Corruption is “the misuse of entrusted power for private gain” (“Frequently Asked Questions about Corruption,” 2008).

Democracy is the political system where “the government is accountable to its own people; the rule of law prevails; and freedoms of expression, association, and belief, as well as respect for the rights of minorities and women, are guaranteed” (“About Us,” n.d.).

Governance refers to “the process by which governments are selected, monitored, and replaced; the capacity of the government to effectively formulate and implement sound policies; and the respect of citizens and the state for the institutions that govern economic and social interactions among them” (“Governance Matters 2008,” 2008).

Democracy is inextricably linked to governance because the former is considered the political system whereby good governance is achieved. Therefore, whenever the terms “democracy” and “governance” are used in this study, they are joined - democracy and governance.

Development is the extent to which the people in a society are able to “develop their full potential and lead productive, creative lives in accord with their needs and interests. . . . Development is thus about expanding the choices people have to lead lives that they value [and] is thus about much more than economic growth, which is only a means – even if a very important one - to enlarging  people’s choices” (“Human Development Report”, 2008). “Development” is used interchangeably with economic development in this study.

Statement of the Problem

Many studies show that the relationship between culture, democracy and governance, and corruption has a direct bearing on economic development and, for this reason, is worth the empirical investigation.

Therefore, this study proposes to answer the following:

- What is the relationship between culture, democracy and governance, and corruption, across various countries worldwide?

- What are the trends in democracy and governance, and in corruption in the Philippines, specifically?

Operationalization of Constructs

Culture is operationalized in terms of the values, attitudes, and beliefs measured by the World Values Survey (WVS). WVS is an expansion of the European Values Study (EVS), a survey originating in 1981 for the purpose of investigating “how Europeans think about life, family, work, religion, politics, and society” (“About EVS,” n.d.). EVS was initiated by the European Value Systems Study Group (EVSSG), at that time an informal grouping of academics, in the late seventies (“History,” n.d.). After generating a great deal of interest, EVS, suitably renamed WVS, was extended to non-European countries. Since 1981 five “waves” of EVS/WVS have been conducted, the fifth being done in 2005-2006. WVS is regularly conducted by the World Values Survey Organization (WVSO), an international network of social scientists (“World Values Survey,” 2006).

After analyzing the four waves of the WVS data, Inglehart and Welzel, Chairman and Vice President, respectively, of the Executive Committee of the WVSO, argued that two orthogonal factors account for over 50 percent of cross-cultural variation (Inglehart, 2000).

The first factor, Traditional versus Secular-Rational Values, basically reflects the difference between societies in which religion is very important and those in which it is not, along with a host of related values.

The second factor, Survival versus Self-Expression Values, basically reflects the difference between materialist and post-materialist values, between, on the one hand, the values of developing societies that emphasize economic and material security, and on the other, the values of developed societies in which survival is taken for granted and that show increasing interest in self-expression, subjective well-being, and quality of life.

Corruption is operationalized in terms of Transparency International’s Corruption Perceptions Index (CPI), a score ranging from 1 to 10 indicating the perceived levels of corruption in a country based on expert assessments and opinion surveys. A low score corresponds to a high level of corruption (“Corruption Perceptions Index 2007,” 2008).

Democracy and governance is operationalized in terms of Freedom House ratings for political rights, civil liberties, and overall freedom. Ratings for Political Rights and Civil Liberties range from 1 to 7, while Freedom Status scores range from 1 to 3. Lower scores for Political Rights and Civil Liberties and higher scores for Freedom Status signify higher degrees of freedom. Freedom House ratings measure the extent to which political rights and civil liberties are freely exercised outside the control of the government and other centers of potential domination, indicating – indirectly – the extent to which democracy is successfully practiced in a country. Freedom House ratings do not directly measure democracy or democratic performance (“Frequently Asked Questions,” n.d.).

Research Objectives

The research problems were translated into two research objectives.

- To investigate the relationship between culture, democracy and governance, and corruption among various countries worldwide

- To identify trends in democracy and governance ratings, and in corruption perceptions ratings, particularly, for the Philippines

Significance of the Study

The study contributes to the growing literature on culture and development. It addresses questions raised specifically about the Philippines, particularly, whether it is Philippine culture itself that is detrimental to development. By contributing to the understanding of the relationship between culture and development, the study sought to contribute toward a research-based agenda for development policies, plans, and programs in the Philippines.

Limitations of the Study

The scope of the study is limited to the analysis of data available from three worldwide organizations: World Values Survey (WVS) Association, Transparency International, and Freedom House.

Because WVS surveys are not conducted every year but approximately every five years, association analyses were restricted as follows:

- Analyses of culture, and democracy and governance variables were limited to two seven-year periods: 1990-96 and 1997-2003. Analyses were conducted between periods and for the combined data of the two different periods. If WVS data were available for two or more years during a specific period, only the latest score during the period was included in the analysis. Based on the above limitations, 38 countries were analyzed.

- Analyses of culture, democracy and governance, and corruption variables were limited to two four-year periods: 1995-98, and 1999-2002. Analyses were conducted between periods and for the combined data of the two different periods. If WVS data were available for two or more years during a specific period, only the latest score during the period was included in the analysis. Based on the above limitations, 11 countries were analyzed.

WVS data were not included in the time series analyses because the number of data points (maximum of four) was insufficient to construct time series models.

As a statistical study, it uncovers patterns of statistical relationships among the variables under investigation. Deeper understanding of the constructs involved and their interrelationships entails employing qualitative research methodologies.

Theoretical Framework

Underlying the empirical investigation of the relationship between culture, democracy and governance, and corruption is a liberal conception of development serving as a connecting thread. The terms “development” or “economic development” were defined according to the understanding of the United Nations Development Programme (UNDP) as the expansion of the meaningful choices available to people in a society - the wider the choices available to people in a society to lead lives that they value, the more developed is the society (“Human Development Report,” 2008). Development, thus, is not only about increasing wealth but also about doing so in order to expand freedom, that is, the choices meaningful to the people in a society. This conception of development has been described by Nobel-prizewinning Amartya Sen as “development as freedom.” It is this understanding of development, which has roots in European liberal philosophy of the seventeenth century, to which this study subscribes. This theoretical understanding of development clarifies the relationship of democracy and governance, corruption, and culture to development.

Democracy, the political system that is the operational outcome of liberal philosophy, promotes development. Democracy as a political system that seeks to uphold and protect political rights and civil liberties, principally by establishing an accountable government and upholding the rule of law, advances freedom by guaranteeing political freedoms that  assure other freedoms, such as economic freedom.

Good governance promotes the practice of democracy by making the government accountable to its citizens. Accountability provides a vital check upon the exercise of political power according to democratic ideals.

Corruption diminishes good governance. Corruption is the abuse of political power held in trust, and it reduces freedom by unfairly and deceptively assigning greater resources to those who hold political power, detracting from the equitable exercise of the political, economic, and other freedoms guaranteed by democracy.

Culture, understood as “subjective culture” - the values, attitudes, beliefs, orientations, and underlying assumptions of the members of a society (Huntington, 2000) - reflects the degree of development of a society. If development is positively associated with democracy and governance and negatively associated with corruption, then liberal culture, that is, the values, attitudes, and beliefs espoused by liberal philosophy, should be positively associated with development, and democracy and governance, and negatively associated with corruption.

Analyzing data gathered by the WVS, Inglehart and Welzel (2005) argued that two underlying factors, Traditional versus Secular-Rational Values, and Survival versus Self-Expression Values, account for at least 50 percent of cross-cultural variation. Assuming the validity of the two factors, this study’s understanding of development indicates that more developed societies should demonstrate values, attitudes, and beliefs tending toward Secular-Rational and Self-Expression, while less developed societies should demonstrate values, attitudes, and beliefs tending toward Traditional and Survival.

What accounts for the direction of the relationship between development and the two factors? The evolution of liberal philosophy into a democratic political system is the result of secular and rational reaction against Christianity, in particular, the traditional values of Roman Catholicism in Post-Reformation Europe. In addition, because liberal philosophy seeks to promote individual autonomy, the advancement of democracy is associated with the expansion of self-expression, that is, with the extension of freedoms beyond survival.

Data Sources

Data in this study is gathered principally from three Internet sources: Freedom House website, www.freedomhouse.org; Transparency International website, www.transparency.org; and WVS website, www.worldvaluessurvey.org.

Democracy and governance data are gathered from Freedom House ratings on political rights, civil liberties, and overall freedom; corruption data from Transparency International’s CPI scores; and culture data from the WVS.

Freedom House ratings consist of ordinal data. Political Rights and Civil Liberties ratings range from 1 to 7, while Freedom Status scores range from 1 to 3. Freedom House ratings are limited to 38 countries for two seven-year periods (1990-96 and 1997-2003) and to 11 countries for two four-year periods (1995-98 and 1999-2002), as previously explained.

Transparency International’s CPI scores consist of ordinal data. Countries are assigned a score from 0 to 10, higher scores representing lower levels of corruption perceptions. Transparency International CPI scores are limited to 11 countries for two four-year periods (1995-98 and 1999-2002), as earlier noted.

WVS data consists principally of attitude rating scale responses (interval data) corresponding to WVS questions. WVS data also includes country factor scores (ratio data) for Traditional versus Secular-Rational Values, and for Survival versus Self-Expression Values. WVS data is limited to 11 countries for two four-year periods (1995-98 and 1999-2002), as previously explained.

Data Analysis

To investigate the relationship between culture, democracy and governance, and corruption among various countries worldwide, the following were conducted:

Culture was measured in terms of country scores for two factors: Traditional versus Secular-Rational Values, and Survival versus Self-Expression Values. Democracy and governance was measured in terms of Freedom House ratings for political rights, civil liberties, and overall freedom, for various countries. Corruption was measured in terms of CPI scores for various countries. Simple correlational analyses investigating associations among all the variables were conducted.

Culture, and democracy and governance data were limited to 38 countries for two seven-year periods: 1990-96 and 1997-2003. Correlations were generated between periods and for the combined data of the two different periods.

Culture, democracy and governance, and corruption data were limited to 11 countries for two four-year periods: 1995-98 and 1999-2002. Correlations were generated between periods and for the combined data of the two different periods. (See Limitations of the Study section.)

Canonical correlation analysis is a technique used to identify the relationships between two sets of variables, theoretically designated as independent and dependent, respectively. Canonical correlation analyses were conducted with country factor scores as the independent variables, designating culture, and Freedom House ratings and CPI scores as the dependent variables, for the combined data of the 1995-98 and 1999-2002 periods. Freedom House ratings and CPI scores designated democracy and governance, and corruption, respectively.

Multiple regression analysis is a technique employed to identify the relationships between one set of variables, theoretically designated as independent, and a single theoretically dependent variable. Multiple regression analyses were conducted with country factor scores as the independent variables, designating culture, and individual Freedom House ratings - Political Rights rating, Civil Liberties rating, and Freedom Status score - as the dependent variables, for the combined data of the 1995-98 and 1999-2002 periods. A multiple regression analysis was also conducted with country factor scores as the independent variables, designating culture, and CPI as the single dependent variable, for the combined data of the 1995-98 and 1999-2002 periods.

Correlation analyses were conducted only for those countries for which data was available according to the constraints specified by the research methodology.

Because all Freedom House ratings were ordinal variables, Spearman’s r rather than Pearson’s r was computed for all correlations among the WVS factor scores and democracy and governance ratings.

To study trends in democracy and governance ratings, and in corruption perceptions ratings, particularly, for the Philippines, the approaches below were utilized:

Time series analyses using ARIMA and exponential smoothing methods were conducted for Philippine data on political rights, civil liberties, and overall freedom ratings. Exponential smoothing only was used to analyze Philippine CPI scores because of the limited number of data points (13).

Projected ratings and scores were generated to investigate the prospects for change and improvement in the next twelve years.

WVS ratings and scores were not included in this analysis because the number of data points (maximum of four) was insufficient to construct a time series model.

Results and Discussion

Results affirm the strong relationship among the variables in this study denoting culture, and democracy and governance. Generally, in the combined period, Spearman’s r for, on the one hand, Freedom House ratings and CPI scores, and on the other, WVS factor scores are statistically significant (at least p < 0.01) and of moderate or strong magnitude, ranging from | r | = 0.520 to | r | = 0.916. However, the correlations between Freedom Status score and WVS factor scores are generally not statistically significant. This result may possibly be accounted for by the fact that the Freedom Status score is a three-point ordinal variable, so that it is not as sensitive a measure of democracy and governance as the other two, namely, Freedom House ratings and CPI score.

Therefore, results show that the Freedom House ratings for democracy and governance are positively associated. Furthermore, lower Political Rights and Civil Liberties ratings and higher CPI scores are positively correlated with WVS factor scores. This means that favorable Political Rights and Civil Liberties ratings and CPI scores are positively associated with attitudes and values tending toward Secular-Rational and Self-Expression. These results are consistent with the literature.

Correlations between individual WVS factor scores and between individual democracy and governance scores across two different periods are, with the exception of individual Freedom Status scores in 1995-98 (Period 1) and 1999-2002 (Period 2), statistically significant and generally strong.

Canonical correlation analyses were also conducted with country factor scores for Traditional versus Secular-Rational Values, and for Survival versus Self-Expression Values as the independent variables, and Freedom House ratings and CPI scores as the dependent variables. Two sets of analyses were conducted, one which excluded CPI scores and covered 38 countries, the other which included CPI scores and covered 11 countries.

The first analysis yielded a statistically significant canonical correlation (F = 9.64, p < 0.0001) of moderate magnitude (C = 0.679). The canonical correlation model (raw coefficients) is given in Figure 1.

The second analysis also yielded a statistically significant canonical correlation (F = 4.20, p < 0.0016) of moderately strong magnitude (C = 0.869). The canonical correlation model (raw coefficients) is given in Figure 2.

Multiple regression analyses were conducted with country factor scores as the independent variables, and Freedom House ratings and CPI scores as the dependent variables.

Since the Traditional versus Secular-Rational Values score, and the Survival versus Self-Expression Values score are orthogonal factors, it was not necessary to check for or to correct the multiple regression models for multicollinearity among the independent variables.

All multiple regression models were statistically significant (p < 0.000), with moderate values for R, ranging from 0.511 to 0.796. However, model refinement is still required. Results of Shapiro-Wilk tests for normality indicate that assumptions concerning normality of the residuals are not satisfied.

On the other hand, residuals plots show that assumptions about constancy of variance of the residuals are satisfied when Freedom House ratings and CPI scores are plotted against Traditional versus Secular-Rational Values scores. They are also satisfied for the residuals when the Political Rights rating and CPI score are plotted against the Survival versus Self-Expression Values score. However, constancy of variance assumptions do not appear to be satisfied when the Civil Liberties rating and the Freedom Status score are plotted against the Survival versus Self-Expression Values score.

The four multiple regression models (unstandardized coefficients) are given in Figure 3.

Results of the multiple regression analyses imply moderate associations between culture, and democracy and governance, and between culture and corruption.

The time series analyses of Freedom House ratings yielded ARIMA (0, 1, 0) models, that is, random walks. Because of the absence of autoregressive terms in a random walk, it is unsatisfactory for forecasting.

Pulse and step intervention models were explored to investigate the possibility of improvement in democracy and governance measures through intervention. The years of regime change were defined as specific interventions in the Freedom House ratings time series for the Philippines. For example, the year of the EDSA Revolution, 1986, was entered as both pulse and step interventions into the time series models. However, because of the relative constancy of the time series observations, cross-correlation coefficients could not be computed (zero variance, in effect), and intervention models could not be generated.

Although exponential smoothing models, which are deterministic, are for this reason often not deemed realistic, they are very effective in revealing trends. Consequently, exponential smoothing was employed to generate forecast values for Freedom House ratings for the Philippines in the period 1972–2005 and for CPI scores in the period 1995–2006. In addition, forecast values were generated for Freedom House ratings for the period 2006–2017 and for CPI scores for the period 2007–2018.

Constant trend (Trend = 1), linear trend (Trend = 2), and quadratic trend (Trend = 3) models were generated. The default value for the smoothing weight of the model is 0.2 (Weight = 0.2). Smaller smoothing weights are suitable for slowly changing trends, higher smoothing weights for rapidly changing trends.

Time series plots show that the most suitable model for the data is that of the linear trend (Weight = 0.2), which forecasts slight declines (improvements) in Political Rights and Civil Liberties ratings, a very slight rise (improvement) in Freedom Status scores, and a slight decline (worsening) in CPI scores (see figures 4-7). Constant trend models (Weight = 0.2) result in flat trends beyond 2005 or 2006 in the cases of Freedom House ratings or CPI scores, respectively, while quadratic trend models (Weight = 0.2) result in the forecast values dropping off or rising, and in the cases, specifically, of Political Rights and Civil Liberties ratings, and of CPI scores, precipitously.

Notably, there is a spike (improvement) in Political Rights ratings in 1986-87, and in Civil Liberties ratings in 1984-86, which are attributable to improved international analysts’ perceptions of Philippine democracy during the period immediately before and after the 1986 EDSA Revolution. There is no doubt that the 1986 EDSA Revolution, which brought about the overthrow of the authoritarian Marcos regime, played an important role in improving democracy and governance in the Philippines. Moreover, this improvement, while modest, appears to have been lasting, because since the 1986 EDSA Revolution Philippine Freedom House ratings have not declined to below pre-1984 levels.

There is another spike (improvement) in CPI scores in 1997-99, during the period immediately before and after President Joseph Estrada was elected in 1998. Apparently, corruption perceptions had been improving prior to his election, only to drop steeply after the president’s first year in office.

Exponential smoothing models, thus, show that both the 1986 EDSA Revolution and the election of President Joseph Estrada had direct effects on Philippine democracy and governance and corruption ratings, indicating that individual political events, including the behavior of individual political actors are factors that may significantly influence, for better or worse, democracy and governance, and corruption in the Philippines.

Conclusions

Data analyses affirm the moderate to strong associations among culture, democracy and governance, and corruption. Data fit predictive models fairly well, in which cultural factors are independent variables, and democracy and governance measures are dependent variables. Because culture is associated with democracy and governance, and corruption, which, in turn, are associated with economic development, James Fallows’ decades-old argument that culture is indeed economic destiny is supported by the results.

The direction of the associations indicates that cultures which demonstrate attitudes that tend toward survival rather than self-expression are more likely to be less democratic and more corrupt.

Corruption is, thus, associated with poverty. Ostensibly, prosperity allows people to focus beyond survival on the exercise of their political and related freedoms, and it is the effective exercise of the freedoms guaranteed by a democratic society that, presumably, checks corruption.

Cultures demonstrating attitudes that are more traditional, less secular-rational are also more likely to be less democratic and more corrupt. However, in contrast to the positive association between “survival” attitudes and corruption, the association between “traditional” attitudes and corruption is weaker.

Notably, arguments positing culture as cause and economic development as effect are not supported. Causal relationships assume time order, meaning, cause precedes effect, yet cultural factors do not inevitably precede economic factors but rather operate in parallel. Consequently, it is a more plausible argument to say that cultural and economic factors interact, simultaneously operating as cause and effect.

Numerous countries have been excluded from the analyses because data were not available. WVS scores were not available, for example, for China, representing one-fifth of the world population, for most of the countries in Africa and Southeast Asia, and - this deficiency continues to hold true for recent WVS data - for some important countries in the Middle East, including the Gulf states. The latter, which may perhaps be described as exceptive because they have high per capita incomes characteristic of the developed world, mainly Western, yet belong to the Islamic cultural bloc, is notably missing from the WVS Map of the World.

The time series analysis revealed that improvement in democracy and governance, and in corruption levels, is likely to be gradual in the Philippines, despite the potential of individual political events and actors to significantly influence trends. Time series analysis projects gradual change in democracy and governance, and corruption measures, and gradual change at relatively high levels of corruption at that. If culture is, indeed, destiny, then the findings of this study are just slightly optimistic with respect to improvement in democracy and governance, and in corruption levels in the Philippines.

This study concludes that culture is truly associated with corruption, and the prospects for change in corruption levels in the period projected by the study (twelve years), and by association the prospects for cultural transformation, are gradual.

Recommendations for Further Study

One useful area for further research covers case studies of other countries, particularly those which have successfully improved over time in measures of democracy and governance, and corruption, especially. Some questions worth investigating include: What might be the most influential factors accounting for improvement over time? Has culture been a factor in the improvement? If yes, to what extent?

Although Singapore is often cited as worthy of political and economic study because it is one of the most successful development cases in the Southeast Asian region, other countries that rank high on the Human Development Index (HDI) and close to the Philippines in cultural proximity are also worth careful examination, among them, Chile, Mexico, or Malaysia, for example.

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