Analytics, Corruption, EU – Baltic States, Financial Services, Legislation, Markets and Companies

Based on three corruption perception indexes, the study concludes that Latvia loses 13.16% to 19.24% of its gross domestic product annually, or EUR 3.4 billion to EUR 5.08 billion.

In terms of losses caused by corruption, Latvia is ranked alongside Lithuania, Poland, Slovakia, Romania, Bulgaria, Croatia, Greece, and Italy.

The study found the EU suffers losses in its gross domestic product that range between EUR 179 billion and EUR 990 billion each year.

The figures are much higher than a 2014 estimate by the European Commission of EUR 120 billion. However, the Commission's study focused only on direct effects of corruption.

"Corruption is a big black hole at the heart of the European economy," said Carl Dolan, director of Transparency International. "If companies see the public procurement process is rigged then they are not going to take part in that bid and therefore the public loses out because these aren’t competitive tenders."

The study found that corruption related to public procurement was estimated to cost nearly EUR 5 billion per year.

Average corruption levels across EU28 (1995-2014)

To reduce it, RAND Europe suggested that the EU implement a Union-wide e-procurement system, which would bring down the cost of corruption by an estimated EUR 920 million. Another measure to cut corruption would be establishing a European Public Prosecutor's Office, the study said. Such an office would investigate corruption cases and could reduce corruption costs by EUR 0.2 billion per year.

"The fact that the EU has not been able to deliver on these very modest things is probably an indication of how low a priority this has been for the EU over the last number of years," added Dolan.

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.

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