CORRUPTION IN EUROPE Economic determinants

Abstract

Corruption is a phenomenon which affects societies negatively in various ways. The costs of corruption are pollical, economic and social, as well as environmental. The phenomena have numerous explanations, and this study focuses on the economic determinants of corruption being economic development, economic freedom and income distribution. The aim with this study is to examine the relationship between corruption and its economic determinants, answering the research question “How does economic determinants, such as economic development, economic freedom and income distribution, affect corruption in Europe?”. Previous research has placed great emphasis on the relationship between economic components and corruption, however more focus on the determinants and their effects on corruptions needs to be contributed. Further, the relationship needs more recent examination as well as focus on the European countries. By using data from the Quality of Government Institute (QoG), regression analysis is carried out examining the relationship between corruption and its economic determinants. The results indicate that some economic determinants have an effect on corruption in Europe, where economic development has an explanatory effect, and economic freedom has a direct effect on corruption. Income distribution indicated no significance when testing at a bivariate level but turned out significant at a multivariate level with controls.