CORRUPTION, COMPETITIVENESS AND PUBLIC FINANCE IN EUROPEAN COUNTRIES

The paper discusses the relationship among corruption, competitiveness and public finance in the European countries. The influence of the corruption on the competitiveness and the economic performance is mentioned in the first part. Attention is given to the influence of the corruption on the economic environment and in particular possible impacts on public finance. The clean economic environment with low level of corruption is favourable for the economic performance and the public finance. The key hypothesis of the paper can be expressed this way: the competitiveness is high in countries with a clean economic environment even if there are high government expenditures and high taxes. Clean and transparent economic environment could be important as taxes and the volume of the government expenditures for public finance. The same argument applies to the competitiveness. The hypothesis is tested in the second part of the paper. The relationship between the level of the corruption and competitiveness as well as relationship between corruption and public finance is not possible unequivocally prove because CPI and CGI are based fully or partly on "soft" data. Nevertheless, the importance of clean economic environment is unchallengeable.