Paper #482

Title:

Economic integration and corruption: The corrupt soul of the European Union

Authors:

Juan J. Ganuza and Esther Hauk

Date:

June 2000

Abstract:

We study the link between corruption and economic integration. We show that if an economic union establishes a common regulation for public procurement, the country more prone to corruption benefits more from integration. However, if the propensities to corruption are too distinct, the less corrupt country will not be willing to join the union. This difference in corruption propensities can be offset by a difference in efficiency. We also show that corruption is lower if integration occurs. A panel data analysis for the European Union confirms that more corrupt countries are more favorable towards integration but less acceptable as potential new members.

Keywords:

Corruption, procurement, economic integration

JEL codes:

D72, F15, H57, C23

Area of Research:

Microeconomics

Published in:

International Journal of Industrial Organizations, 22, 10, pp. 1463-1484, 2004

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