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Does Graft Predict Debt Woes?

This may be cheap science. But take a look at the seventeen Eurozone countries according to their rank on the 2010 corruption perception index.

Greece is perceived as the most corrupt country in the Eurozone. Its debt crisis has threatened the EU for months, hammered the international banking sector, and roiled world stock markets.

Just when the Greek debt problem was looking better, attention shifted to Italy. Predictably, it ranks next to last of the Eurozone countries according to the CPI.

Then come Slovakia and Malta — not yet major economies — followed by Spain and Portugal. Both are mentioned as the next potential sovereign-debt trouble spots.

Ireland breaks the mold, ranking near the top on the CPI but being a Eurozone laggard.

We’re not making too much of this. And it doesn’t mean clean countries can’t run into debt problems. But perhaps there’s a link between regimes perceived as corrupt and a messy handling of their fiscal affairs.

Here’s the list of Eurozone countries with their CPI rank in parentheses:

1.  Finland (4)

2.  The Netherlands (7)

3.  Luxembourg (11)

4.  Ireland (14)

5.  Germany (15)

6.  Austria (15)

7.  Belgium (22)

8.  France (25)

9.  Estonia (26)

10.  Slovenia (27)

11.  Cyprus (28)

12.  Spain (30)

13.  Portugal (32)

14.  Malta (37)

15.  Slovakia (59)

16.  Italy (67)

17.  Greece (78)

By the way, Turkey — a Eurozone wannabe — ranks 56 on the CPI. That’s near the bottom of the list of current members.

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1 Comment

  1. I would suggest there is a link, for example, during a recent case hearing in the UK it was revealed that the Greek NHS was paying €4,400 each for prosthetic knee joints as opposed to the €1,100 average price elsewhere in Europe. The inflated price being used to pay bribes.

    This is a clear example that bribes cause inflated prices, and therefore the cost to the country.

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