1. Introduction: Corruption Perception as a Governance Signal

The 2025 edition of Transparency International’s Corruption Perceptions Index (CPI) ranks 182 countries and territories according to perceived levels of public sector corruption, using a scale from 0 (highly corrupt) to 100 (very clean). In CPI 2025, Türkiye received a score of 31, marking a three-point decline compared to the previous year and placing 124th out of 182 jurisdictions. The global average score stands at 42, and more than two-thirds of countries score below 50. At first glance, the CPI may appear to be a reputational ranking. However, for international investors, lenders and multinational corporations, it functions primarily as a governance indicator rather than a moral assessment. The index is widely interpreted as a proxy for the predictability of public decision-making – that is, whether regulatory, administrative and judicial outcomes are perceived to be rule-based or dependent on discretionary or informal factors.

For investment analysis, predictability operates as a form of economic infrastructure. Markets can price risk when rules are stable and consistently applied. When institutional behaviour appears less predictable, transaction costs increase even in the absence of proven corruption cases. As a result, CPI movements influence internal compliance systems, contractual safeguards, risk margins and due diligence processes across borders. Türkiye’s 2025 score should therefore not be read as an isolated annual fluctuation. Since 2012, CPI scores have deteriorated in 50 countries, with some of the sharpest declines recorded in jurisdictions such as Türkiye, Hungary and Nicaragua. In Türkiye’s case, the longer trajectory reflects a structural decline from scores near 50 in the early 2010s to the low-30 range in recent years. This sustained downward movement carries implications not only for public sector integrity debates, but for investment modelling, compliance exposure and capital allocation strategies.

For investors, the critical question is not whether corruption exists in a criminal-law sense. Rather, it is whether similarly situated economic actors can reasonably expect similar administrative treatment. The CPI 2025 results suggest that confidence in this predictability has weakened. That perception – regardless of formal legislative frameworks – alters behaviour in measurable ways. In this context, an investor-oriented legal analysis of the CPI 2025 and Türkiye requires moving beyond headline rankings. It requires examining how perception indices intersect with rule-of-law expectations, institutional oversight, extraterritorial compliance regimes and transactional risk management.

2. Understanding the CPI: What it Measures –  and What it Does Not

2.1. Methodological Structure

The Corruption Perceptions Index does not measure corruption through recorded criminal cases, judicial convictions or investigative statistics. Rather, it aggregates data from multiple independent sources, including expert assessments and surveys of business executives. These sources evaluate perceptions of public sector corruption, institutional integrity, bribery risk, diversion of public funds, and the effectiveness of anti-corruption mechanisms. The methodology is deliberately perception-based. Transparency International relies on the premise that corruption, by its nature, is concealed. Official statistics rarely capture the true extent of misconduct. As a result, the CPI synthesizes informed assessments from actors who interact with public institutions, regulatory authorities and procurement systems. For investors, this methodological feature is particularly significant. The index reflects how economic actors experience and evaluate institutional behaviour, rather than how many corruption cases are prosecuted. In other words, the CPI mirrors the informational environment in which investors themselves operate.

2.2. What the CPI Does Not Measure

A recurrent misunderstanding is to equate CPI scores with proven criminal wrongdoing. The CPI does not determine whether corruption exists in a legal sense. It does not identify individual officials, establish criminal liability or quantify illicit financial flows. Nor does it measure private sector corruption outside the public sphere. Furthermore, the CPI does not assess the formal quality of legislation. A jurisdiction may possess comprehensive anti-corruption statutes, detailed procurement rules and advanced compliance frameworks. Yet if enforcement appears inconsistent or institutional oversight is perceived as weak, the CPI score may still decline. For investors, this distinction is critical. Markets do not evaluate jurisdictions based solely on statutory design. They assess the credibility of implementation. A sophisticated legal framework does not eliminate risk if decision-making processes are perceived as unpredictable.

2.3. The CPI as a Governance and Predictability Indicator

The CPI functions, in practice, as an indicator of governance reliability. At its core lies a fundamental question: Are public decisions perceived to be rule-based, transparent and consistent From an investment perspective, predictability is often more important than formal legislative content. Investors can operate in complex regulatory systems if outcomes are foreseeable and administrative criteria are applied consistently. Uncertainty, by contrast, increases the cost of capital, delays transactions and necessitates precautionary compliance structures. The CPI therefore acts as a proxy for:

• The perceived impartiality of public administration
• The consistency of regulatory enforcement
• The independence and effectiveness of oversight institutions
• The credibility of accountability mechanisms

When a CPI score declines, the signal transmitted to markets is not necessarily that corruption has increased in measurable terms. Rather, it suggests that confidence in institutional processes has weakened. That weakening affects pricing behaviour, internal compliance requirements and long-term investment planning. For multinational enterprises subject to extraterritorial anti-corruption regimes, perception itself becomes operationally relevant. Corporate headquarters often classify jurisdictions according to external risk indices. CPI scores frequently inform enhanced due diligence thresholds, documentation standards and third-party monitoring intensity.

In this sense, the CPI is less a criminal-law metric than a governance-risk indicator. It does not answer the question, “How many corruption cases exist?” It answers a different question: “How confident are informed observers that public authority is exercised according to predictable rules?” For investors evaluating Türkiye in 2025, this distinction frames the analytical starting point. The index must be interpreted as a signal about institutional consistency and oversight credibility – factors that directly influence transactional architecture and compliance design.

3. Türkiye’s CPI Trajectory: A Structural Trend

3.1. Historical Overview: From Relative Stability to Sustained Decline

Türkiye’s 2025 CPI score of 31 must be assessed within a longitudinal framework rather than as an isolated annual result. In the early 2010s, Türkiye’s score hovered around the 50-point threshold, reflecting a comparatively stronger perception of institutional integrity. Over the past decade, however, the trajectory has been consistently downward. The decline has not been abrupt but gradual. Successive annual reductions have compressed Türkiye’s position into the low-30 range, culminating in its 2025 score of 31 and ranking of 124th among 182 countries and territories. This long-term deterioration places Türkiye among the jurisdictions experiencing some of the sharpest perception declines since 2012. From an investor’s perspective, sustained downward movement carries more weight than short-term volatility. Markets can tolerate fluctuations; structural decline, by contrast, alters long-term risk modelling. When perception indices demonstrate a decade-long downward trend, they begin to influence classification decisions by rating agencies, compliance departments and institutional investors.

3.2. Regional and Comparative Context

Türkiye’s current score sits below the global average of 42 and below the regional average for Eastern Europe and Central Asia. When compared with OECD member states, the divergence becomes even more pronounced. While CPI scores in Western Europe remain significantly higher on average – despite recent stagnation – Türkiye’s relative position within that broader institutional comparison has weakened. Comparative analysis is particularly relevant for cross-border investors allocating capital across emerging markets. Investment committees rarely evaluate a single jurisdiction in isolation. Instead, they assess relative governance risk among peer economies. In this comparative framework, Türkiye’s declining CPI score signals a shift in relative institutional positioning. It is also noteworthy that other countries experiencing similar CPI declines – such as Hungary and Nicaragua  have faced broader debates regarding institutional independence, oversight capacity and concentration of executive power. While each jurisdiction has its own legal and political context, investors often interpret declining CPI scores as part of a broader governance narrative.

3.3. Structural Versus Cyclical Interpretation

The critical analytical question is whether Türkiye’s CPI trajectory reflects cyclical fluctuation or structural deterioration. A cyclical interpretation would suggest that temporary political tensions, economic pressures or high-profile investigations influenced perceptions in a given year. A structural interpretation, by contrast, points to sustained institutional shifts affecting checks and balances, regulatory independence, judicial autonomy and civic oversight mechanisms. The decade-long downward pattern strengthens the structural reading. When perception indices move consistently in one direction over an extended period, markets infer that underlying institutional dynamics have changed. This does not require proof of systemic corruption; rather, it reflects a change in confidence regarding institutional safeguards. For investors, structural governance shifts influence:

• Long-term capital allocation decisions
• Country risk classification frameworks
• Pricing of sovereign and corporate debt
• Duration of investment commitments
• Compliance budgeting and oversight design

In particular, predictability is closely linked to investment horizon. Short-term transactional capital may tolerate elevated uncertainty if returns are sufficient. Long-term strategic investment – infrastructure, manufacturing, financial services – requires a higher degree of institutional stability.

3.4. Investor Implications of a Sustained Decline

When CPI scores deteriorate over a decade, investors typically respond in three ways. First, they increase internal risk weighting for the jurisdiction. This does not necessarily prevent investment, but it alters approval thresholds and oversight intensity. Second, they expand contractual and procedural safeguards. Enhanced representations and warranties, arbitration clauses, audit rights and compliance covenants become more prominent in transactional documentation. Third, they adjust monitoring practices. Local subsidiaries may face more frequent audits, expanded documentation requirements and stricter third-party controls. Importantly, these responses occur even in the absence of direct evidence of corruption affecting a specific transaction. The reaction is precautionary, driven by perceived governance risk rather than documented misconduct. Thus, Türkiye’s CPI trajectory matters less as a symbolic ranking and more as a structural governance signal. It affects how investors model risk, structure transactions and allocate compliance resources.

4. CPI as a Governance and Predictability Indicator

4.1. Predictability as a Core Element of the Rule of Law

In legal theory, the rule of law is not limited to the existence of statutes. It encompasses predictability, equality before the law, and the consistent application of norms. Investors do not require simplicity; they require foreseeability. Complex regulatory systems can be navigated when criteria are clear and consistently enforced. The Corruption Perceptions Index operates as a proxy for how predictably public authority is exercised. A declining CPI score signals that observers perceive greater discretion, opacity or inconsistency in public decision-making. This perception alone alters investment behaviour. Predictability functions as an invisible form of economic infrastructure. Just as transport and energy systems enable commerce, institutional reliability enables contractual planning. When predictability weakens, transaction costs rise. Legal advice expands. Compliance layers multiply. Decision timelines lengthen. For investors evaluating Türkiye, the CPI therefore becomes an indirect measure of the stability of administrative practice and regulatory interpretation.

4.2. Discretion Versus Rule-Based Administration

Every legal system contains discretion. Administrative authorities must interpret statutes and apply them to specific circumstances. However, markets distinguish between bounded discretion – exercised within transparent and reviewable criteria – and unstructured discretion, where outcomes appear to depend on informal considerations. A key concern for investors is not whether discretion exists, but whether it is predictable and reviewable. If licensing approvals, tax assessments, inspections or procurement decisions follow identifiable patterns and are subject to independent judicial review, discretion remains manageable. Where outcomes appear to vary significantly between similar cases, or where review mechanisms are perceived as ineffective, uncertainty increases. In such environments, companies cannot reliably forecast regulatory timelines, compliance costs or enforcement exposure. The CPI’s downward movement in Türkiye suggests a weakening perception of institutional consistency. Even without demonstrable legal violations, this perception influences how companies structure their operations.

4.3. Institutional Oversight and Accountability Mechanisms

Governance predictability depends not only on written rules but on oversight capacity. Independent courts, audit institutions, regulatory authorities and investigative journalism collectively contribute to the credibility of accountability systems. Transparency International’s broader analysis of the 2025 CPI highlights concerns about shrinking civic space and weakening anti-corruption leadership globally. In jurisdictions where journalists, civil society organisations or whistleblowers face pressure, misconduct may be less likely to surface. Even if formal enforcement bodies exist, reduced transparency affects perception. For investors, accountability mechanisms serve as risk stabilisers. When irregularities can be detected and corrected, confidence in the system remains intact. Where detection and correction appear uncertain, precautionary compliance responses intensify. In this respect, the CPI does not simply reflect corruption risk; it reflects perceived institutional resilience.

4.4. Predictability and Capital Allocation

Capital allocation models incorporate governance indicators because uncertainty affects expected returns. A decline in CPI scores typically leads to:

• Expanded internal compliance documentation
• Heightened scrutiny of public-sector interactions
• More extensive due diligence on local partners and intermediaries
• Increased use of international arbitration clauses
• Conservative forecasting of regulatory timelines

These adjustments do not necessarily prevent investment. However, they increase operational friction and reduce net efficiency. Long-term investors – particularly in infrastructure, manufacturing, energy and financial services – are sensitive to institutional reliability. Their exposure is multi-year and capital-intensive. Where predictability weakens, such investors either demand higher returns or shorten investment horizons. For Türkiye, the CPI’s trajectory therefore intersects directly with economic strategy. Governance perception influences not only reputational standing, but the structural cost of capital and compliance.

4.5. The CPI as an Operational Indicator

The CPI should not be interpreted as a moral ranking or political commentary. For investors, it functions as an operational indicator. It influences risk matrices, approval processes and jurisdictional classifications within multinational compliance systems. In this sense, the CPI does not determine whether corruption exists in a legal sense. It determines whether markets believe that public decision-making is sufficiently predictable to permit stable economic planning. For Türkiye in 2025, the central issue is therefore not symbolic ranking but institutional confidence. The more predictably public authority is exercised, the lower the precautionary burden placed on investors. Conversely, as predictability perceptions weaken, compliance and monitoring costs rise – even in the absence of formal legal change. 

5. How Markets React: Risk Pricing, Compliance Expansion and Transactional Consequences

5.1. The CPI as a Risk-Pricing Variable

Financial markets do not treat the Corruption Perceptions Index as a moral judgment. They treat it as a variable within broader country-risk assessment frameworks. Institutional investors, sovereign lenders, export credit agencies and multinational corporations integrate governance indicators into quantitative and qualitative risk models. A decline in CPI scores typically feeds into internal jurisdictional classification systems, affecting:

• Risk premiums applied to lending
• Insurance coverage conditions
• Country risk ceilings
• Internal capital allocation thresholds

In this context, the CPI operates as a pricing signal. It does not automatically prohibit investment, but it adjusts the cost of engagement. When governance predictability is perceived to decline, the cost of capital rises  – either directly through financial pricing mechanisms or indirectly through expanded compliance burdens. For Türkiye, sustained downward movement in CPI scores influences how counterparties evaluate exposure, particularly in capital-intensive or highly regulated sectors.

5.2. Compliance Expansion and Internal Control Intensification

One of the most immediate responses to a declining CPI score occurs within corporate compliance departments. Multinational enterprises subject to extraterritorial anti-corruption regimes – including the U.S. Foreign Corrupt Practices Act and the UK Bribery Act – classify jurisdictions according to perceived risk. A lower CPI score typically triggers:

• Enhanced due diligence requirements for third parties
• Stricter approval thresholds for public-sector interactions
• Increased monitoring of agents and intermediaries
• Expanded audit rights and internal reporting obligations
• Additional documentation of government-facing transactions

Compliance therefore shifts from a formal obligation to an operational practice. Companies must not only ensure that conduct is lawful, but that it is demonstrably controlled and auditable. In higher-risk classifications, local subsidiaries may face mandatory pre-approval requirements for licensing applications, procurement bids or public tenders. This slows transaction timelines and increases advisory involvement. These measures are precautionary. They are implemented not because misconduct has occurred, but because perception indices suggest elevated governance risk.

5.3. Transactional Friction and Contractual Safeguards

Governance perception affects transactional architecture. In cross-border investments involving Türkiye, counterparties increasingly incorporate expanded contractual protections, including:

• Detailed representations and warranties regarding compliance history
• Anti-corruption covenants and termination clauses
• Audit and inspection rights
• Escrow mechanisms or deferred payment structures
• International arbitration clauses to mitigate perceived judicial uncertainty

These contractual safeguards aim to manage uncertainty rather than to remedy proven wrongdoing. However, they introduce friction into negotiations and increase legal costs. Transaction timelines extend as parties conduct enhanced due diligence. Documentation requirements multiply. External counsel involvement expands. The cumulative effect is not prohibition but friction – a gradual increase in the cost and complexity of doing business.

5.4. Routine Administrative Touchpoints as Risk Concentration Points

Corruption risk rarely manifests in dramatic scenarios. Instead, it emerges in ordinary administrative procedures:

• Licensing approvals
• Construction permits
• Customs clearance
• Tax inspections
• Regulatory compliance reviews
• Public procurement processes

For investors, the principal concern is not the existence of regulation, but the consistency of its application. If similar applications are processed within similar timeframes and according to transparent criteria, compliance remains manageable. However, if outcomes appear to vary unpredictably, companies cannot reliably plan operational timelines. This uncertainty leads firms to compensate by:

• Increasing documentation of administrative interactions
• Involving external advisors in routine procedures
• Escalating matters internally before submission to authorities
• Delaying commitments until regulatory clarity is obtained

The resulting cost is not a statutory penalty; it is a precaution imposed by uncertainty.

5.5. Impact on Long-Term Strategic Investment

Short-term capital can absorb elevated governance risk when returns are sufficiently high. Long-term strategic investors – infrastructure funds, energy operators, manufacturing conglomerates and financial institutions – operate differently. These investors depend on:

• Stable regulatory frameworks
• Predictable administrative practice
• Reliable enforcement of contractual rights
• Effective dispute resolution mechanisms

When CPI scores decline over a sustained period, strategic investors reassess duration exposure. They may shorten investment horizons, demand higher return thresholds or allocate capital to comparatively more predictable jurisdictions. For Türkiye, this dynamic is economically significant. Governance perception influences not only transactional behaviour but structural investment patterns.

5.6. From Perception to Operational Behaviour

The central point is that perception shapes behaviour. The CPI does not establish legal culpability. It influences how investors behave in anticipation of uncertainty. Expanded compliance layers, enhanced documentation, prolonged approval processes and increased contractual safeguards all translate into higher transaction costs. Even if formal legislation remains unchanged, market reactions alter operational realities. For Türkiye in 2025, the CPI’s decline therefore functions as a behavioural signal. It affects how cautiously investors operate, how extensively compliance systems are deployed and how risk is priced across sectors.

6. Extraterritorial Compliance and Legal Exposure

6.1. CPI Scores and Jurisdictional Risk Classification

In an era of extraterritorial enforcement, corruption perception is no longer a purely domestic governance issue. Multinational corporations operating in or connected to Türkiye are subject not only to local law, but also to foreign anti-corruption regimes with global reach. Corporate compliance systems typically classify jurisdictions according to risk indicators, including the CPI. A sustained low score, such as Türkiye’s 31 in 2025, often results in designation as a higher-risk jurisdiction within internal compliance matrices. This classification has operational consequences regardless of whether a particular company has encountered misconduct. Thus, the CPI becomes embedded in corporate governance architecture. It influences how headquarters assess subsidiary exposure, allocate compliance resources and evaluate reputational risk.

6.2. The U.S. Foreign Corrupt Practices Act (FCPA)

The U.S. Foreign Corrupt Practices Act imposes liability on U.S. issuers, domestic concerns and certain foreign entities for bribery of foreign public officials. It also contains accounting provisions requiring accurate books and records and effective internal controls. Under the FCPA, companies are expected to implement risk-based compliance programs. Enforcement authorities, including the U.S. Department of Justice and the Securities and Exchange Commission, routinely evaluate whether compliance frameworks are tailored to jurisdictional risk levels. In practice, a lower CPI score increases scrutiny in three ways:

• Enhanced Due Diligence Requirements: Companies must conduct more extensive vetting of local agents, distributors, consultants and joint venture partners.
• Expanded Internal Controls: Government-facing expenditures require stricter approval mechanisms and documentation.
• Monitoring and Auditing: Higher-risk jurisdictions are subject to more frequent audits and compliance reviews.

Importantly, liability under the FCPA does not require proof that a jurisdiction is broadly corrupt. It requires proof of improper payments or inadequate internal controls. However, perception indices influence prosecutorial expectations regarding what constitutes “adequate” compliance in a given environment. Thus, for companies operating in Türkiye, the CPI decline may indirectly elevate compliance expectations under U.S. enforcement standards.

6.3. The UK Bribery Act and the “Adequate Procedures” Standard

The UK Bribery Act adopts an even broader framework, criminalising bribery in both public and private sectors and imposing strict liability on commercial organisations for failure to prevent bribery. The principal defence available to corporations is the existence of “adequate procedures” designed to prevent bribery. Adequacy is assessed in light of jurisdictional risk. Where a country is perceived as higher risk, companies must demonstrate proportionately stronger preventive measures. This includes:

• Clear anti-corruption policies
• Comprehensive employee training
• Robust third-party due diligence
• Effective reporting channels
• Ongoing monitoring and review

A declining CPI score does not automatically imply increased bribery risk within a specific transaction. However, it raises the evidentiary burden on corporations to show that their compliance frameworks are sufficiently rigorous. Consequently, companies operating in Türkiye may face heightened expectations from UK-based regulators, auditors and investors.

6.4. Cross-Border Financing and Lender Expectations

Extraterritorial exposure extends beyond anti-bribery statutes. International lenders and development finance institutions frequently incorporate governance risk assessments into financing conditions. Lower CPI scores may result in:

• Additional representations regarding anti-corruption compliance
• Covenants requiring adherence to international compliance standards
• Enhanced reporting obligations
• Rights of inspection or audit by lenders

Project finance transactions in infrastructure, energy or public-private partnerships are particularly sensitive to governance perception. Lenders seek assurance that public sector interactions are transparent and legally secure. In this context, CPI movements affect not only legal liability but financing architecture.

6.5. Parent Company and Board-Level Exposure

Under modern corporate governance frameworks, boards of directors are expected to oversee risk management systems. Jurisdictional risk classification is therefore not merely an operational matter; it becomes a board-level issue. A sustained decline in CPI scores in a country where a corporation operates may trigger:

• Board-level review of local compliance structures
• Expansion of internal investigation capabilities
• Greater involvement of external counsel
• Risk committee reporting enhancements

Failure to respond appropriately to known jurisdictional risk indicators may later be interpreted as inadequate oversight. For multinational groups with subsidiaries in Türkiye, CPI trends thus intersect with fiduciary duties and corporate governance standards.

6.6. Compliance as an Operational Necessity

The interaction between CPI scores and extraterritorial enforcement regimes demonstrates a broader shift in global corporate practice: compliance has become operational rather than symbolic. Companies must now be able to demonstrate that:

• Decisions involving public authorities are documented and traceable
• Third-party relationships are monitored and auditable
• Payments are transparently recorded
• Internal approval processes are consistently applied

The emphasis is no longer solely on legality of outcome, but on integrity of process. In jurisdictions where governance perception declines, companies respond by embedding more granular oversight into routine operations. This increases administrative burden but mitigates enforcement exposure.

6.7. Implications for Türkiye in 2025

For Türkiye, the CPI’s 2025 trajectory intersects with extraterritorial legal exposure in a tangible way. Even absent domestic legislative change, multinational enterprises will likely intensify compliance measures, expand documentation requirements and enhance monitoring of local operations. The economic effect is indirect but real. Transaction costs rise. Approval processes slow. Advisory involvement increases. Capital allocation decisions incorporate a governance risk premium. Thus, CPI perception influences cross-border legal exposure and operational strategy simultaneously.

7. Economic Infrastructure, Investment Behaviour and the Cost of Uncertainty

7.1. Predictability as Economic Infrastructure

Economic development is commonly associated with tangible infrastructure: transportation networks, energy systems, digital connectivity and financial markets. Yet institutional predictability functions as an equally critical – though intangible – form of infrastructure. Predictability enables economic planning. It allows investors to forecast regulatory outcomes, allocate capital over extended horizons and assess risk-adjusted returns. Where legal and administrative processes are stable and consistently applied, uncertainty can be priced with relative confidence.

The Corruption Perceptions Index, when interpreted as a governance signal, therefore reflects more than reputational standing. It indirectly measures confidence in institutional infrastructure. A declining CPI score signals perceived erosion in that infrastructure – not necessarily through overt misconduct, but through increased discretion, opacity or weakened oversight mechanisms. For Türkiye in 2025, the sustained downward CPI trajectory suggests that institutional predictability is being perceived as less robust than in previous years. This perception, irrespective of statutory change, affects economic behaviour.

7.2. Uncertainty and Transaction Cost Theory

From an economic perspective, uncertainty increases transaction costs. According to transaction cost theory, economic actors incur additional costs when contractual enforcement is uncertain or when regulatory outcomes cannot be reliably anticipated. These costs manifest in several ways:

• Expanded legal advisory involvement
• Increased due diligence procedures
• Additional internal approval layers
• Broader documentation requirements
• Higher insurance and financing premiums

The cumulative effect is incremental. Each precaution adds marginal cost. Over time, these costs affect competitiveness and capital allocation decisions. Importantly, the increase in transaction costs does not require proof of corruption. It arises from the perception that outcomes may depend on discretionary factors beyond formal legal criteria. In this context, CPI movements serve as early indicators of rising transaction friction.

7.3. Investment Horizon and Governance Sensitivity

Different categories of capital respond differently to uncertainty. Short-term portfolio investors may tolerate governance volatility if returns are sufficiently attractive and liquidity is high. By contrast, long-term strategic investors – infrastructure funds, manufacturing enterprises, energy operators and financial institutions – require sustained institutional reliability. These investors depend on:

• Stable regulatory regimes
• Predictable administrative processes
• Consistent judicial interpretation
• Credible dispute resolution mechanisms

Where governance perception weakens, long-term capital becomes more cautious. Investment horizons may shorten. Required returns may increase. Capital may be redirected toward jurisdictions with stronger institutional predictability. For Türkiye, whose economic strategy relies significantly on foreign direct investment and cross-border financing, governance perception directly intersects with growth prospects.

7.4. Capital Allocation and Risk Premiums

In financial modelling, country risk is incorporated into discount rates and expected return thresholds. Governance indicators, including the CPI, contribute to this calculation. A sustained decline in CPI scores may influence:

• Sovereign risk perception
• Corporate borrowing costs
• Equity risk premiums
• Credit ratings and outlook assessments

While CPI scores alone do not determine macroeconomic outcomes, they contribute to the broader informational environment used by rating agencies and institutional investors. As perceived governance risk increases, investors demand higher compensation. The cost of capital rises accordingly. This dynamic affects both public and private sectors. Infrastructure projects, public-private partnerships and large-scale industrial investments become more sensitive to governance credibility.

7.5. Behavioural Adjustment in Corporate Strategy

Corporate responses to governance uncertainty extend beyond compliance. Strategic behaviour shifts. Companies may:

• Delay expansion decisions
• Limit exposure to public procurement sectors
• Avoid high-discretion regulatory areas
• Prefer joint ventures with established international partners
• Insist on international arbitration clauses rather than domestic litigation

These adjustments are subtle but consequential. They shape the sectors in which capital flows and influence the scale and duration of investment commitments. Over time, such behavioural shifts can affect broader economic structure.

7.6. The Cost of Uncertainty Without Legal Change

One of the most significant features of CPI-driven behaviour is that it operates independently of formal legal reform. Even if legislation remains unchanged, perception-driven uncertainty alters operational realities. Compliance burdens expand. Financing becomes more conditional. Documentation intensifies. Thus, the economic cost of governance perception arises not from statutory penalty but from precautionary adaptation. For Türkiye, the 2025 CPI decline underscores this phenomenon. The economic implications stem less from legal amendments and more from how institutional predictability is perceived by international markets.

7.7. Structural Implications for Türkiye

If governance perception continues to deteriorate, three long-term consequences may emerge:

• Increased structural transaction costs across sectors
• Higher capital costs for both public and private actors
• More cautious and shorter-duration investment commitments

Conversely, improvements in institutional transparency, judicial independence and oversight credibility could reverse these behavioural adjustments and lower the cost of capital. Thus, CPI trajectories are economically consequential not because they impose legal sanctions, but because they influence expectations. For investors, expectations shape behaviour. For economies, behaviour shapes outcomes.

8. Policy and Institutional Considerations for Türkiye

8.1. Governance Reform as Economic Strategy

The 2025 CPI results should not be interpreted solely as a reputational challenge. They should be viewed as an economic policy signal. In an interconnected financial environment, institutional credibility is a component of competitiveness. For Türkiye, improving governance perception is not merely a normative objective; it is an investment strategy. Predictability lowers transaction costs, reduces risk premiums and strengthens long-term capital formation. The central policy question is therefore not how to respond to rankings, but how to enhance the structural elements that underpin investor confidence: transparency, accountability and consistency in public decision-making.

8.2. Judicial Independence and Consistency of Adjudication

Investor confidence in a jurisdiction ultimately rests on dispute resolution credibility. Courts and arbitration frameworks must not only function formally, but must be perceived as impartial and consistent. Policy priorities in this domain include:

• Reinforcing safeguards for judicial independence
• Ensuring transparent judicial appointment and disciplinary processes
• Promoting consistency in case law interpretation
• Enhancing enforcement of court judgments

Predictable adjudication reduces uncertainty in contractual relationships. For investors, the availability of effective judicial review mitigates the risk associated with administrative discretion. Improving perception in this area directly strengthens the credibility of the broader governance environment.

8.3. Administrative Transparency and Regulatory Consistency

A substantial portion of investor interaction with the state occurs through administrative authorities rather than courts. Licensing, inspections, procurement processes and tax administration represent critical touchpoints. Strengthening predictability in these domains may involve:

• Publishing clear, accessible regulatory criteria
• Standardising administrative procedures across regions
• Limiting discretionary interpretation through written guidance
• Digitising application and approval systems to enhance traceability

Transparency in administrative decision-making reduces reliance on informal channels and reinforces equal treatment. From an investor perspective, the ability to anticipate procedural timelines and evidentiary requirements is as important as the substantive regulatory framework.

8.4. Oversight Mechanisms and Institutional Accountability

Governance credibility depends on the presence of effective oversight institutions. Audit authorities, regulatory agencies and independent supervisory bodies function as stabilisers within the system. Policy measures that reinforce oversight include:

• Ensuring institutional independence of supervisory bodies
• Providing adequate resources for investigative capacity
• Protecting whistleblowers from retaliation
• Maintaining openness to civil society monitoring

While the CPI does not directly measure enforcement statistics, it reflects confidence in oversight mechanisms. Strengthening accountability frameworks contributes not only to substantive anti-corruption efforts but to perception of institutional resilience.

8.5. Civic Space, Transparency and Information Flow

Transparency is closely linked to information availability. Journalistic freedom, civil society participation and access to public data enhance detection of irregularities and reinforce institutional trust. For investors, transparent information ecosystems reduce asymmetry. When public procurement data, regulatory decisions and administrative criteria are accessible, risk assessment becomes more precise. Reforms aimed at improving access to information, digital transparency platforms and public reporting standards can therefore produce measurable economic benefits.

8.6. Alignment with International Compliance Standards

Given the extraterritorial nature of modern anti-corruption enforcement, alignment with international compliance standards enhances investor confidence. This may involve:

• Harmonising domestic anti-corruption legislation with OECD and international conventions
• Demonstrating effective enforcement through transparent reporting
• Engaging in peer-review mechanisms
• Strengthening cooperation with international financial institutions

Such alignment reduces the compliance burden for multinational enterprises and signals commitment to predictable governance.

8.7. Restoring Predictability as Economic Infrastructure

The core insight derived from CPI analysis is that predictability functions as economic infrastructure. Institutional reforms aimed at reinforcing rule-based governance directly influence capital allocation decisions. For Türkiye, strengthening investor confidence requires not merely legislative reform but consistent implementation. Markets respond to observable behaviour over time. Sustained institutional reliability, rather than episodic intervention, shapes perception trajectories. Improvements in governance credibility may gradually reduce precautionary compliance costs, lower risk premiums and encourage longer-duration investments.

8.8. A Forward-Looking Perspective

The CPI is neither a definitive judgment nor an irreversible verdict. Perception indices are responsive to structural reform and institutional strengthening. Jurisdictions that have implemented consistent transparency measures, reinforced oversight institutions and improved judicial independence have demonstrated upward mobility in CPI rankings over time. For Türkiye, the strategic path forward lies in reinforcing the institutional elements that underpin rule-based governance. Doing so would not only improve perception metrics but also reduce the economic cost of uncertainty. Investor confidence is ultimately a function of expectation. Where expectations of predictability are restored, behavioural responses adjust accordingly.

9. Conclusion: Reading the CPI 2025 as an Operational Governance Signal for Investors

The 2025 Corruption Perceptions Index does not determine whether corruption exists in a criminal-law sense, nor does it measure the legality of individual administrative acts. Its significance lies elsewhere. For investors, it functions as an operational governance signal – an indicator of how predictable public authority is perceived to be. Türkiye’s score of 31 and its sustained downward trajectory over the past decade should therefore be interpreted within a structural framework. Markets respond not to symbolic rankings but to perceived institutional reliability. When predictability weakens, precautionary behaviour increases. Compliance layers expand, contractual safeguards intensify and transaction timelines lengthen. Even in the absence of formal legal change, the economic cost of uncertainty rises.

The CPI’s relevance thus lies in its behavioural impact. International investors do not rely on corruption indices to assess morality; they use them to evaluate risk. Risk assessments influence capital allocation, financing conditions, compliance architecture and long-term investment horizons. A declining perception of institutional consistency translates into higher transaction costs and a more cautious operational posture. For Türkiye, the broader implication is clear: governance credibility is an economic variable. Predictability functions as infrastructure, shaping how confidently economic actors can plan and execute investment decisions. Where institutional oversight, administrative transparency and judicial consistency are perceived as robust, risk premiums decline. Where perception deteriorates, precautionary costs increase.

Importantly, perception is not immutable. CPI trajectories can change when institutional reforms are sustained and observable. Markets respond to demonstrable improvements in transparency, accountability and rule-based administration. The key determinant is consistency over time. The 2025 CPI should therefore be read not as a reputational judgment, but as an early warning mechanism within global risk assessment systems. For investors, it signals how cautiously to operate. For policymakers, it highlights the economic value of institutional predictability.

Ultimately, the central question is not whether corruption exists in abstract terms. It is whether economic actors believe that rules will be applied consistently and outcomes can be reasonably anticipated. Where that confidence is strengthened, investment expands. Where it weakens, caution prevails.

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Reference: Bıçak Vahit (2026) “The 2025 Corruption Perceptions Index and Türkiye: Rule of Law, Governance Predictability, and Investment Risk”, Bıçak Law Firm Blog, https://www.bicakhukuk.com/en/turkiyes-2025-corruption-perceptions-index-score/, Prgf. __., Access Date: ….