Corruption is a phenomenon that can inflict serious political, economic and social harms to societies around the world. In addition, it poses a significant challenge to social justice and the rule of law, which may undermine trust in democratic institutions and processes. This study looks at the cost of non-Europe in relation to corruption, examining potential added value or benefits of EU-wide implementation of anti-corruption policies.

The Cost of Non-Europe in the area of Organised Crime and Corruption

Annex II - Corruption

Marco Hafner, Jirka Taylor, Emma Disley, Sonja Thebes, Matteo Barberi, Martin Stepanek, Mike Levi

ResearchPublished Mar 22, 2016

Corruption is a phenomenon that can inflict serious political, economic and social harms to societies around the world. In addition, it poses a significant challenge to social justice and the rule of law, which may undermine trust in democracy and democratic institutions and processes.

The risks of and harms caused by corruption are well recognised by the European Union. 'Fight against corruption' was one of the key objectives of the Stockholm Programme, which guided home affairs priorities in the European Union from 2010-2014. Control of corruption is also one of the components of Europe 2020, the growth strategy for the European Union covering the current decade.

This study looks at the cost of non-Europe in relation to corruption. 'Cost of non-Europe' studies may examine either the challenges of incomplete integration, or the opportunities afforded by greater integration than currently exists. In this case, we examined the potential added value or benefits of EU-wide implementation of anti-corruption policies.

Please note: This report is not available on the RAND website but can be downloaded from the European Parliament website.

Key Findings

Corruption costs the EU between €179bn and €990bn in GDP terms on an annual basis.

  • These figures are higher than the estimate of €120bn included in the 2014 EU Anticorruption Report(ACR), because the estimate in the EU ACR does not account for the indirect effects of corruption (it looks at costs in terms of lost tax revenues and foreign investment due to corruption).

Corruption in the EU has significant social costs and political costs.

  • Corruption is associated with more unequal societies, higher levels of organised crime, weaker rule of law, reduced voter turnout in national parliamentary elections and lower trust in EU institutions.

The cost of corruption risk in EU public procurement is around €5bn per year.

  • The costs of corruption in public procurement vary considerably between Member States. This estimate is slightly higher than the estimate provided by a previous, large study. This could be because our estimate includes all sectors of public procurement and all Member States, whereas the previous estimate included eight Member States and five sectors.

Recommendations

  • The EU should apply the updated Cooperation and Verification Mechanism, which was used on Bulgaria and Romania before they joined the EU, to other member states, as over half have higher than average corruption levels. This could reduce corruption costs by €70 billion (£54.4 billion) annually.
  • The EU should establish a European Public Prosecutors' Office, which would assist the European Commission Anti-Fraud Office in investigating corruption. This could reduce corruption costs by €0.2 billion (£0.16 billion) annually.
  • The EU should implement a full EU-wide procurement system, potentially reducing corruption costs by €920 million (£714.8 million) annually.
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Document Details

  • Copyright: European Union
  • Publisher: RAND Corporation
  • Availability: Web-Only
  • Year: 2016
  • Pages: 157
  • DOI: https://doi.org/10.7249/RR1483
  • Document Number: RR-1483-EP

Citation

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Hafner, Marco, Jirka Taylor, Emma Disley, Sonja Thebes, Matteo Barberi, Martin Stepanek, and Mike Levi, The Cost of Non-Europe in the area of Organised Crime and Corruption: Annex II - Corruption, RAND Corporation, RR-1483-EP, 2016. As of October 12, 2024: https://www.rand.org/pubs/research_reports/RR1483.html
Chicago Manual of Style
Hafner, Marco, Jirka Taylor, Emma Disley, Sonja Thebes, Matteo Barberi, Martin Stepanek, and Mike Levi, The Cost of Non-Europe in the area of Organised Crime and Corruption: Annex II - Corruption. Santa Monica, CA: RAND Corporation, 2016. https://www.rand.org/pubs/research_reports/RR1483.html.
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