The impact of corruption on national competitiveness and euro-zone imbalances

Paper to be presented at 75^th  International Atlantic Economic Conference

Vienna, Austria

April 3 - 6, 2013

 

The Impact of Corruption on National Competitiveness and Euro-zone Imbalances.

O. Katsaitis and D. Doulos

The American College of Greece

katsa@acg.edu and ddoulos@acg.edu

Abstract

Corruption remains a serious economic problem in developed and developing countries worldwide. Among other things, corruption affects growth and national competitiveness. This paper examines to what extend has corruption contributed to the deterioration of current account balances of Southern European countries relative to the core countries in the euro-zone. Specifically, we focus on the extent to which corruption, by increasing the cost of doing business, limiting competition and distorting the efficient allocation of financial and human resources, reduces growth and competitiveness. Using panel estimation for 11 Euro-zone countries, we expect to find a significant impact from corruption on competitiveness and external balance deterioration.