Somalia's corruption ranking indicates the level of instability in the country, according to the study [Reuters]

Somalia is the most corrupt country in the world, followed by Afghanistan, Myanmar and Iraq, an international watchdog has said.

In its annual report released on Tuesday, Transparency International found Somalia to be most corrupt country, topping a list of the 178 countries surveyed.

The international watchdog found almost 75 per cent of the countries to be in the index score below five, on a scale from 10 (very clean) to 0 (highly corrupt).

These findings indicate a serious worldwide corruption problem and highlight the need to make more efforts to towards strong governance structures across the globe.

Edda Mueller, the head of Transparency International's German section, said that the overall international situation was "very worrying".

"There are clear indications that the more unstable a country is, the higher the level of corruption."

And at the other end of the scale, Denmark, New Zealand and Singapore shared the top slot as the least corrupt nations.

They were followed by Finland, Sweden, Canada and the Netherlands.

Successful fight 

The study also identified the countries that have successfully fought corruption and have shown an improvement in the rankings.

These include Bhutan, Chile, Ecuador, Gambia, Haiti, Jamaica, Kuwait and Macedonia.

Chile and Uruguay were rated the least-corrupt countries in Latin America, while the best ranking in the Middle East was given to Qatar.

Mueller said that the performance of these countries should serve as hope and inspiration for countries such as Afghanistan and Iraq.

The report found that some countries that were hit hard by the the global economic crisis became more corrupt during the last year. Greece and Italy feature in this category together with the United States, which has dropped its position from 19th to 22nd in the last year.

Transparency International has identified corruption as a major hindrance in fighting major problems like the financial crisis and climate change.

It has advocated stricter implementation of the United Nations Convention against Corruption, the only global initiative that provides a framework for putting and end to corruption.

Transparency International's corruption index is based on 13 different surveys of business people and governance experts conducted between January 2009 and September 2010.