Research Article

The National Culture, Best Countries Rank Number, Corruption Performance Index, and Governance. A Study in 8 Countries.

Tri Gunarsih , M Jusuf Wibisana ,
Article Date Published : 8 July 2019 | Page No.: 5541-5547 | Google Scholar

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Abstract

This study implements correlation analysis to explore the relationships between the national culture; best countries rank number, Corruption Performance Index (CPI) and governance in 8 countries in the Europe region (Croatia, France, Hungary, and Italy) and Asia region (Indonesia, Malaysia, Philippine, and Singapore). The national culture based on six dimensions of Hofstede et al. The best countries rank number based on usnews.com. The CPI based on transparency.org. The Governance based on The World Bank Worldwide Governance Indicators, in six expressions. The two highest of culture indicators is Malaysia (Power distance and Indulgence). The two most top indicators of culture are Hungary (Individualism and Masculinity), while the highest uncertainty avoidance is France, and the highest score of long term orientation is Singapore. The highest CPI Score is Singapore (84 out of 100 ratings), and the highest number of best countries is France (9 out of 80 countries). Six indicators of Culture correlate with governance indicators. CPI correlates with best countries rank number and five governance indicators. Country Rank correlates with six governance indicators. The results show that not all of the variables correlate with other variables, but governance correlates with all the three variables. These suggest that the improvement of national culture, the higher the rank number of the best countries and the higher the CPI will lead to being better governance.


 

Keywords: The National Culture, Best Countries Rank Number, Corruption Performance Index, and governance

Introduction

S tudies in the governance and performance are mix in term of level (country and firm), in proxies (governance index and performance indicators) and also in findings. Study in the country level c onducted by Gani (2011)1 that demonstrates, that “ increasing a country’s political stability and government effectiveness leads to greater economic growth.” Studies in the firm levels conducted by Altman (2013)2 and Ngobo and Fauda (2012)3. Some studies support the argument that there is a relationship between governance and economic performance and that the higher the governance score, the higher the performance (Altman (2013)2, Ngobo and Fauda (2012)3, Adkinson and McFerrin and Gani (2011)1 ).

In the country lev el, Altman (2013)2 found that “the higher the country scores on the Good Capitalist Governance Index, the higher its per-capita income.” Other stud ies, Adkinson and McFerrin, explore the Governance indicator (The World Bank Worldwide Governance Indicators, in six expressions) as dependent variables. The explanatory variables are real per capita GDP (PPP) and culture measured in two dimensions. Based on the data set in 68 nations, they find that the level of development, measured as real per capita GDP has the most solid relationship with good governance but, in most cases, the cultural measures are influential as well. In the firm level, based on an other governance index, the World Bank ’ s governance indices, Ngopo, and Fauda (2012)3 found that the better a country performs on the governance indices, the higher the profitability of the firms. The study conducted in firms located in 21 countries.

S ome studies explore and analyze the relationship between governance and culture (Adendoff and Boshoff (2010)4, Paramitha et al. (2012)5, Evans et al. (2002)6, and Llopisa. The literature review research that describes the conceptual framework between good governance to organizational culture and organizational culture to corporate performance, especially in higher education in Indonesia conducted by Paramitha et al. (2012)5. The literature review concludes that the quality of higher education c ould be determined by aspects of governance and organizational culture that exists in the organization. With good governance and good culture, it can support the performance of educational institutions.

Adendoff and Boshoff (2010 ) 7 found “that needs alignment, cultural needs alignment, vision, and ethnic entrepreneurial growth all impact directly or indirectly on perceived good governance in South African Greek family businesses.”   A study in Indonesia companies shows strong implications of organi zational culture on internal corporate g overnance (Evans et al., 2002)6 This implies that to execute corporate governance effectively, c ompanies need to understand the ways cultural factors influence it. The last two empirical studies show that culture influence governance. While the conceptual framework describes the opposite direction, that the context is between good governance to organizational culture and organizational culture to organiz ational performance (Paramitha et al., 2012).5

While some studies analyze the relationship between governance and culture, other stud ies explore the relationship between corruption and governance (Faisal and Jafri, (2017 ), Rizqi et al. (2017)8,9 ). Accor ding to Faisal and Jafri (2017)8, corruption flourishes when the government of a country fails to strengthen the measures of good governance regularly. Periodic attempts of defensive nature against corruption do not produce the desired results of social welfare. Rizky e t al. (2017)9 explain the effects of corruption (perce ived) on inequality reduction, a lso whether good governance has a role in def ining the consequence s. The l ess corrupt environment is essential to policies on reducing inequality, especially good governance in the arena of bureaucracy and civil society.

As defined by Transparency International, corruption is the abuse of powe r that one has been entrusted for the sake of private interests. It affects everyone whose life, livelihood, or welfare depends on the integrity of those who occupy a position of authority. Mlambo et al. (2019)10 investigate the drivers and consequences of corruption in post-colonial Africa. They argue that the post- colonial era, “there has been a rise of corruption activities within the continent where individuals, including some African heads of states, have looted the continent of its resources meant for the general populace.” In this sense, corruption takes fund s intended for the poor, limits foreign direct investments (FDI) and has severe effects on a continent that is already the least developed in the world.

There are numerous studies in the culture, corruption performance, governance, and performance (some were described in the first part of this paper), but none explores those variables to the rank number of the best countries. Th en th is study implements correlation analysis to explore the relationships between the national culture ; best countries rank number, Corruption Performance Index (CPI) and governance. The best countries report, and rankings are based on how global perceptions define stat es in terms of several qualitative characteristics, impressions that have the potential to drive trade, travel, and investment and directly affect national economies. The report covers perceptions of 80 nations ( https://www.usnews.com/ ). Eight countries are selected in Europe and Asia region, high and low countries rank number and also represent high and low CPI and governance index.

National Culture

This section describes the eight national culture s of 4 countries represent Asia region (Indonesia, Malaysia, Philippines, and Singapore) and four countries represent Europe region (Croatia, Fran ce, Hungary, and Italy) as in figure 1 and figure 2 respectively ( https://www.hofstede-insights.com/product/compare-countries ). The culture in a national culture defined as “the collective programming of the mind distinguishing the members of one group or category of people from others.”

Figure 1: :

Sourc e: https://www.hofstede-insights.com/product/compare-countries/

Figure 1 shows that the highest score of power distance is Malaysia (100) while the lowest in Singapore (74). The highest score of indiv id ualism is the Philippines, and the lowest i n Indonesia (14). The highest score of Masculinity is Philippines (64), and the lowe st in Indonesia (46). The highest number of un certainty avoidance is Indonesia (48), while the lowest in Singapore (8). The highest number of long term orientation is Singapore (72), and the lowest i n the Philippines (27). The highest number of indulgence is Malaysia (57), while the lowest i n Indonesia (38).

Sourc e: https://www.hofstede-insights.com/product/compare-countries/

Figure 2 shows that the highest score of power distance is Croatia (73) while the lowest in Hungary (46). The highest score of indiv idualism is Hungary, and the lowest is Croatia (46). The highest score of Masculinity is Hungary (88), and the lowe st is Croatia (40). The highest number of uncertainty avoidance is France (86), while the lowest in Italy (75). The highest number of long term orientation is France (68), and the lowest is Croatia and Hungary, with the same figure (58). The highest number of indulgence is France (48) while the lowest i n Italy (30).

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Table 1 National Culture six dimensions.in 8 countries.
Country Power Distance Individualism Masculinity Uncertainty Avoidance Long Term Orientation Indulgence
Indonesia 78 14 46 48 62 38
Malaysia 100 26 50 36 41 57
Philippines 94 32 64 44 27 42
Singapore 74 20 48 8 72 46
Croatia 73 33 40 80 58 33
France 68 71 43 86 63 48
Hungary 46 80 88 82 58 31
Italy 50 76 70 75 61 30

Table 1 shows the comparisons of national culture in 8 countries, while table 2 shows the highest and lowest score of them..

Table 2 The highest and the lowest country score in six dimensions.
National Culture Dimensions Highest Lowest
Country Score Country Score
Power Distance Malaysia 100 Hungary 46
Individualism Hungary 80 Indonesia 14
Masculinity Hungary 88 Croatia 40
Uncertainty Avoidance France 86 Singapore 8
Long Term Orientation Singapore 72 Philippines 27
Indulgence Malaysia 57 Italy 30

The explanation of the highest score base on ( https://www.hofstede-insights.com/product/compare-countries ) is as follows.

• M alaysia ’s scores very high on th e power distanc e dimension (score of 100), which means that people accept a hierarchical order in which everybody has a place and which needs no further justification.

• H ungary, with a score of 80, is an Individualist society. This means that there is a high preference for a loosely-knit social framework in which individuals are expected to take care of themselves and their immediate families only.

• Hungary ’s scores 88 on th e masculinity dimension and is thus a Masculine society. In Masculine countries, people “live to work, managers are expected to be decisive and assertive ; the emphasis is on equity, competition and performance and conflicts are resolved by fighting them out.

• French ’s culture scores are 86, high on Uncertainty Avoidance. This is evident that The French don’t like surprises. Structure and planning are required. Before meetings and negotiations, they wish to receive all the necessary information. As a consequence, the French are good in developing complex technologies and systems in a stable environment, such as in the case of nuclear power plants, rapid trains, and the aviation industry.

• Singapore ’s long term orientation scores are 72, this high score is ref le cted in Singapore which shows cultural qualities supporting long-term investment such as perseverance, sustained efforts, slow results, thrift; being sparse with resources, ordering relationship by status and having a sense of shame.

• Malaysia’s high score of 57 in indulgence indicates that culture is one of Indulgence. People in societies classified by a high score in Indulgence generally exhibit a willingness to reali z e their impulses and desires about enjoying life and having fun. They possess a positive attitude and tend toward optimism. Also, they place a higher degree of importance on leisure time, act as they please, and spend money as they wish.

Table 3 shows the significant result of national culture dimension mean comparison in two regions, Europe and Asia. Three aspect s are statistically significant at α 5% (power distance and individualism) and α 1% (uncertainty avoidance), while the other three sizes (Masculinity, Long Term Orientation, and Indulgence) are not statistically significantly different.

The power distance dimension of Europe is lower than in the Asia region, and the mean difference is -27.25. The individualism dimension of Europe region is higher than the Asia region, and the mean difference is 42.00. The uncertainty avoidance dimension in Europe is higher than in the Asia region, and the mean difference is 46.750. These suggest that some aspects are the same, while others are not the same.

Table 3 Mean comparison national culture dimension in 2 regions.
Dummy Region N Mean t value Sig. Mean Difference
Power Distance Europe 4 59.25 -2.994 0.024 -27.250
Asia 4 86.50
Individualism Europe 4 65.00 3.653 0.011 42.000
Asia 4 23.00
Uncertainty Avoidance Europe 4 80.75 5.025 0.002 46.750
Asia 4 34.00

Rank number of best countries

The rank number of b est countries in this study based on usnews.com publication (https://www.usnews.com/news/best-countries). The report and ranking in their paper based on how global perceptions define countries in terms of several qualitative characteristics, impressions that have the potential to drive trade, travel, and investment and directly affect national economies. The report covers perceptions of 80 nations. Each country scored on each of the 65 country attributes based on a collection of individual survey re sponses. The more a country perceived to exemplify a specific characteristic about the average, the higher that country's attribute score and vice versa.

Table 4 The rank number and best country scores of 8 countries, out of 80 countries
Country Rank Number Overall Score Capital Region
France 9 9.2 Paris Europe
Italy 16 7.3 Rome Europe
Singapore 15 7.3 Singapore Asia
Malaysia 35 2.7 Kuala Lumpur Asia
Hungary 46 2.3 Budapest Europe
Indonesia 39 2.2 Jakarta Asia
Philippine 43 1.9 Manila Asia
Croatia 49 1.9 Zagreb Europe

Table 4 shows the rank number and best country score 2018 of 8 countries out of 80 countries as in https://www.usnews.com/news/best-countries. The best country rank number is France (figure 9), and the score is 9.2. The lowest country rank number in Europe region is Croatia ( figure 49), and the score is 1.9 while in Asia region is Philippine with the same score as Croatia (1.9) and the rank number is 43. Singapore is the best country in the Asia region with the 15 rank number and 7.3 scores.

Corruption Performance Index

The Corruption Performan ce Index (CPI) in this study based on Transparency International (TI) publication. TI is an international organization that advocates for the control of corruption worldwide that has published cross-country data on bribery since 1995.

TI collects the data from several different surveys that mostly report business and expert perceptions of corruption in various countries. The scales used in the data sources must allow for sufficient differentiation in the data (that is, at least a four-point scale) on the perceived levels of corruption across countries and be rescaled to the CPI ’ s 0-100 scale. Each of the sources included in the CPI is standardized to allow for the aggregation into the CPI score. The standardization converts all the data points to a scale of 0 - 100, where a 0 represents the highest level of perceived corruption, and 100 the lowest level of perceived corruption. The CPI draws upon 13 data sources which capture the assessment of experts and business executives on several corrupt behaviors in the public sector, including Bribery, Diversion of federal funds, Use of public office for private gain, Nepotism in the civil service, and State Capture. Some of the sources also look at the mechanisms available to prevent corruption in a country, such as: The government ’ s ability to enforce integrity mechanisms, The effective prosecution of corrupt officials, Red tape and excessive bureaucratic burden, The existence of adequate laws on financial disclosure, conflict of interest prevention and access to information.

Table 5 CPI Score 2017 of 8 Countries.
Country Region CPI Score 2017
Croatia WE/EU 49
France WE/EU 70
Hungary WE/EU 45
Indonesia AP 37
Italy WE/EU 50
Malaysia AP 47
Philippines AP 34
Singapore AP 84

Source: Corruption Perceptions Index 2017: Global Scores

Table 5 shows the CPI score 2017 of 8 countries at a scale of 0 - 100, where a 0 represents the highest level of perceived corruption, and 100 the lowest level of perceived corruption. The lowest level country of perceived corruption is Singapore with CPI score 84. The highest level country of perceived corruption in the Philippines with CPI score 34.

G overnance

The governance index used in this study is The Worldwide Governance Indicators (WGI) 2017 published by the world bank (http://info.worldbank.org/governance/wgi/#home). According to Worldbank (2017)11, governance consists of the traditions and institutions by which authority in a country exercised. Th e governance includes “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.”

The Worldwide Governance Indicators (WGI) project reports aggregate and individual governance indicators for over 200 countries and territories over the period 1996–2017. The six dimensions of governance in WGI consist of Voice and Accountability, Political Stability and Absence of Violence, Government Effectiveness, Regulatory Quality, Rule of Law, Control of Corruption. Each governance indicators performance estimated in the ranges from approximately -2.5 (weak) to 2.5 ( stable).

Table 6 shows the 2017 estimate of governance in 6 dimensions of WGI in 8 countries. The highest score in 5 aspect s of governance is Singapore. The five dimensions are Political Stability and Absence of Violence/Terrorism (1.59), Government Effectiveness (2.21), Regulatory Quality (2.12), Rule of Law (1.82) and Control of Corruption (2.13). Italy has the highest score in Voice and Accountability (1.05). The lowest score in 4 dimensions is the Philippines. The four dimensions are Political Stability and Absence of Violence/Terrorism (-1.24), Government Effectiveness (-0.06), Rule of Law (-0.41) and Control of Corruption (-0.48). Malaysia has the lowest score in Voice and Accountability dimension (-0.4) while Indonesia has the small est size in the Regulatory Quality (-0.11).

Table 6 An estimate of Governance 2017 in 6 dimensions.
Country Voice and Accountability Political Stability and Absence of Violence/Terrorism Government Effectiveness Regulatory Quality Rule of Law Control of Corruption
Croatia 0.51 0.75 0.58 0.42 0.33 0.19
France 0.51 0.21 1.35 1.16 1.44 1.26
Hungary 0.37 0.81 0.51 0.65 0.53 0.09
Indonesia 0.13 -0.51 0.04 -0.11 -0.35 -0.25
Italy 1.05 0.24 0.50 0.70 0.32 0.19
Malaysia -0.40 0.16 0.84 0.68 0.41 0.03
Philipine 0.08 -1.24 -0.06 0.02 -0.41 -0.48
Singapore -0.17 1.59 2.21 2.12 1.82 2.13

Note: Estimate of governance (ranges from approximately -2.5 (weak) to 2.5 (strong).

Correlation

This section describes the correlation analysis to explore the relationships between the national culture; best countries rank number, Corruption Performance Index (CPI), and governance. The national culture consists of 6 indicators (Power Distance, Individualism, Masculinity, Uncertainty Avoidance, Long Term Orientation, and Indulgence). The best country rank number consists of the rank number and the score. The CPI is CPI Score 2017. The six dimensions of governance in WGI include Voice and Accountability, Political Stability and Absence of Violence, Government Effectiveness, Regulatory Quality, Rule of Law, Control of Corruption.

Table 7 shows the correlations between those four variables that are statistically significant at α1%, at α5% and α10%. Six indicators of national culture correlate to governance indicators as follows.

• The correlation between Power Distance and Voice and Accountability is -0.757 significant at α5%. This number suggests that the higher the Power Distance, the lower Voice, and Accountability.

• The correlation between Individualism and Voice and Accountability is 0.719 significant at α5%. This number suggests that the higher the Individualism, the higher the Voice and Accountability.

• The correlation between Uncertainty Avoidance and Voice and Accountability is 0.778 significant at α5%. This figure suggests that the higher the Uncertainty Avoidance, the higher the Voice and Accountability.

• The correlation between Long Term Orientation and Political Stability and Absence of Violence/Terrorism is 0.734 significant at α5%. This figure suggests that the higher the Long Term Orientation, the higher the political Stability and Absence of Violence/Terrorism.

• The correlation between Long Term Orientation and the Rule of Law is 0.631 significant at α10%. This figure suggests that the higher the Long Term Orientation, the higher the Rule of Law.

• The correlation between Long Term Orientation and Control of Corruption is 0.677 significant at α10%. This figure suggests that the higher the Long Term Orientation, the higher the Control of Corruption.

• The correlation between Indulgence and Voice and Accountability is -0.754 significant at α5%. This figure suggests that the higher the Indulgence, the lower the Voice and Accountability.

Five indicators of CPI score correlate to governance indicators as follows.

• The correlation between CPI score with Political Stability and Absence of Violence/Terrorism is 0.745, significant at α5%. This number suggests that the higher the CPI score, the higher the Political Stability and Absence of Violence/Terrorism.

• The correlation between CPI score with Government Effectiveness is 0.978, significant at α1%. This number suggests that the higher the CPI score, the higher the Government Effectiveness.

• The correlation between CPI score with Regulatory Quality is 0.963, significant at α1%. This number suggests that the higher the CPI score, the more top the Regulatory Quality.

• The correlation between CPI score with Rule of Law is 0.974, significant at α1%. This number suggests that the higher the CPI score, the higher the Rule of Law.

• The correlation between CPI score with Control of Corruption is 0.994, significant at α1%. This number suggests that the higher the CPI score, the higher the Control of Corruption.

Table 7 Correlation Results.
Variable Indicator Variable Indicator r 2 sig
Culture Power Distance Governance Voice and Accountability -0.757 ** 0.030
Culture Individualism Governance Voice and Accountability 0.719 ** 0.044
Culture Uncertainty Avoidance Governance Voice and Accountability 0.778 ** 0.023
Culture Long Term Orientation Governance Political Stability and Absence of Violence/Terrorism 0.734 ** 0.038
Culture Long Term Orientation Governance Rule of Law 0.631 * 0.094
Culture Long Term Orientation Governance Control of Corruption 0.677 * 0.065
Culture Indulgence Governance Voice and Accountability -0.754 ** 0.031
CPI CPI Score 2017 Governance Political Stability and Absence of Violence/Terrorism 0.745 ** 0.034
CPI CPI Score 2017 Governance Government Effectiveness 0.978 *** 0.000
CPI CPI Score 2017 Governance Regulatory Quality 0.963 *** 0.000
CPI CPI Score 2017 Governance Rule of Law 0.974 *** 0.000
CPI CPI Score 2017 Governance Control of Corruption 0.994 *** 0.000
Country Rank Rank Number Governance Government Effectiveness -0.670 * 0.069
Country Rank Rank Number Governance Regulatory Quality -0.692 * 0.057
Country Rank Rank Number Governance Rule of Law -0.697 * 0.055
Country Rank Rank Number Governance Control of Corruption -0.724 ** 0.042
Country Score Overall Score Governance Rule of Law 0.754 ** 0.031
Country Score Overall Score Governance Control of Corruption 0.759 ** 0.029
Country Score Overall Score Governance Government Effectiveness 0.686* 0.060

*** significant at α1%, ** significant at α5%,* significant at α10%

The best country rank indicators correlate to 7 indicators of governance as follows.

• The correlation between the rank number with Government Effectiveness is -0.670, significant at α 10%. This number suggests that the bigger the rank number, the lower the Government Effectiveness.

• The correlation between the rank number with Regulatory Quality is -0.692, significant at α 10%. This number suggests that the bigger the rank number, the lower the Regulatory Quality.

• The correlation between the rank number with Rule of Law is -0.697, significant at α 10%. This number suggests that the bigger the rank number, the lower the Rule of Law.

• The correlation between the rank number with Control of Corruption is -0.724, significant at α 10%. This number suggests that the bigger the rank number, the lower the Control of Corruption.

• The correlation between the score of the best country with Rule of Law is 0.754, significant at α 5%. This number suggests that the higher the rating of the best country, the higher the Rule of Law.

• The correlation between the score of the best country with Control of Corruption is 0.759, significant at α 5%. This number suggests that the higher the rating of the best country, the higher the Control of Corruption.

• The correlation between the score of the best country with Government Effectiveness is 0.759, significant at α10%. This number suggests that the higher the rating of the best country, the higher the Government Effectiveness.

The results of correlation analysis between the national culture, best countries rank number, Corruption Performance Index (CPI) and governance show that all of the four variables are correlated. More specifically, not all of the variable indicators relate to the other variable signs.

Conclusion

The results of this study show that there is a correlation between the national culture, best countries rank number, Corruption Performance Index (CPI), and governance in some indicators. This correlation results important to analyze the movement pattern of those variables. Rubasundram supports this movement pattern. According to Rubaundram, governance is a mechanism to ensure an organization achieves its goals efficiently and effectively. Governance can only be successfully implemented if the culture and environment are genuine.

S ome studies show that culture, corruption, and governance are interrelated and influence performance both at the firm level and nations level (Altman (2013)2, Ngobo and Fauda (2012)3; Adkinson and McFerrin and Gani (2011)1. Other study shows that corruption lowers productivity, reduces the effectiveness of industrial policies, and encourages business to operate in the informal sector in violation of tax and regulatory laws (Ciocchini, Durbin, and Ng 2003). Based on the Greek family businesses in South Africa, Adendoff and Boshoff (2010)4 found that needs an alignment, cultural needs alignment, vision and ethnic entrepreneurial growth all impact directly or indirectly on perceived good governance. Graf Lambsdorff (2003a, 2003b)7,12 finds that an improvement in a country ’ s TI corruption score by one point increases productivity by 4% of GDP and increases net annual capital inflows by 0.5% of GDP.

Some national culture indicators correlate with some governance indicators. This suggests that the better the national culture, the higher the governance index. Rule of Law as one of the governance indicator, correlate with the three variables, culture, corruption, and best country rank. The study of Mukundi Gladys Thitu in Kenya supports this result, argued that the rule of law is a prerequisite and vital tool in curbing corruption. Upholding the rule of law is part of a holistic anticorruption approach that can contribute to the fight against corruption and economic crimes in Africa. Indeed, good governance calls for a responsive governmental and administrative framework where law and good governance prevails.

This study in 8 countries, four countries in the Europe region and four countries in Asia region, support the argument that there is relationship and movement pattern in national culture, corruption performance index, and governance. The best countries rank number that was analyzed and correlated to those three variables enriches the relationship and movement pattern. This study has a limitation in the sample size ; then, further research may implement more samples and more regions.13,14,15,16,17,18,19

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Article Details


Issue: Vol 6 No 7 (2019)
Page No.: 5541-5547
Section: Research Article
DOI: https://doi.org/10.18535/ijsshi/v6i7.03

How to Cite

Gunarsih , T., & Wibisana , M. J. (2019). The National Culture, Best Countries Rank Number, Corruption Performance Index, and Governance. A Study in 8 Countries. The International Journal of Social Sciences and Humanities Invention, 6(7), 5541-5547. https://doi.org/10.18535/ijsshi/v6i7.03

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