Trends in corruption and shadow economy in European countries

Abstract

Corruption and the shadow economy are among the most pressing issues facing European countries. These phenomena significantly impact the socio-economic development, political stability, and legal systems of states. The purpose of the paper is to analyze the trends of corruption and the shadow economy in 34 European countries over the period from 2010 to 2022. The research employed tools such as grouping, comparison and generalization methods, time series analysis, and descriptive statistics calculations. Calculations were based on World Bank data using StataSE 18 software. Analyzing the standard deviation, minimum, and maximum values of corruption and shadow economy indicators identifies the most variable indicators: the indicator of primary government expenditures as initially approved budgets and the corruption perception index. It was found that despite the implementation of numerous anti-corruption reforms and regulatory measures, countries such as Albania, Moldova, Ukraine, and Bulgaria continue to face high levels of corruption, as evidenced by their low corruption perception index levels. The main reasons for this included weak enforcement mechanisms, gaps in accountability, and low levels of transparency in public administration. The least corrupt European countries were Denmark, Norway, Finland, Switzerland, and Sweden. This research observed high levels of the shadow economy in Ukraine, Cyprus, and Moldova, while Denmark, Norway, and Sweden demonstrated the lowest levels. The results of the study can be used to develop organisational and economic measures to combat corruption and the shadow economy by public authorities, business entities and other economic agents, which is important for the economic growth of European countries.