Corruption rate and economic performance: European Union in the period of 2012-2022

Corruption, a reflection of a country’s political, economic and cultural institutions, affects all societies to varying degrees. It has significant socio-economic consequences, including a detrimental effect on economic performance, which is closely linked to quality of life. Whilst the European Union has historically enjoyed very low levels of corruption, there has been no significant improvement on average in the period of 2012 to 2022 (Transparency International, 2022). However, corruption rates amongst member states have developed varyingly. The aim of this thesis is to investigate the reasons for varying corruption rates across EU member states, confirm the negative effect of corruption on economic performance using the latest data and discuss the varying corruption rate development amongst member states. The reasearch uses the Corruption Perceptions Index (CPI) alongside various other metrics measuring economic performance, governance, quality of life and cultural dimensions. Additionaly, reports from international and non-governmental organisations on legislative changes, anti-corruption efforts and corruption risks are taken into account when discussing potential causes and effects of corruption rate development. Using this data, the analysis formulates a characteristic of member states based on corruption rate. Member states with lower corruption rates tend to have higher economic performance, better governance and a higher quality of life. In terms of economic performance, these states primarily have a higher GNP per capita. In terms of governance, these states primarily have a higher quality of bureuacracy and public goods, stronger private sector regulations, a more robust rule of law and higher levels of democracy and political accountability. In terms of quality of life, these states primarily have a longer education, higher life expectancy, higher gender equality and life satisfaction. Furthermore, the research reveals that lower corruption rates are associated with specific cultural dimensions, particularly with less hierarchy. Interestingly, the observed changes in corruption rates appear to be solely linked to developments in governance. Member states with a positive corruption rate development mostly experienced an increase in quality of governance. These states also took steps to fight corruption, mainly with stricter anticorruption legislature, support of anti-corruption bodies, informational campaigns and stricter penalties. Member states with a negative corruption rate development experienced a decrease in quality of governance. These states also experienced an increase in indirect causal factors of corruption, largely a decrease in institutional controls, transparency of rules, laws and proceses and behaviour of high-ranking politicians. In conclusion, the thesis finds a persuading connection between corruption and economic performance, quality of governance, quality of life and cultural dimensions. Furthermore, quality of governance appears to be an important factor in short-term corruption development.