The Financial Crisis and Corruption in Europe. Can the Equilibrium Model Explain the Variance? - Caro Glandorf - Bog

Master's Thesis from the year 2014 in the subject Economics - Finance, grade: 1,0, Free University of Berlin, language: English, abstract: The European financial crisis of 2008 and the subsequent debt crises have deeply shaken political systems, economies, and societies all over Europe. And while their devastating effects on many sources of well-being (political stability, economic activity, social justice) are obvious, the discourse about ¿the crisis¿ also features more optimistic tropes: an opportunity to make tabula rasa, to ¿heal¿ dysfunctional financial systems, to deconstruct governance structures that are prone to corruption. And indeed, in historical examples of governance norms transitioning from particularism to universalism, there were always triggering factors, and one of those possible triggering factors is a major financial crisis. So, could the financial, economic, political and social turmoil in Europe after 2008 ¿ the ¿crisis¿ ¿ be such a triggering factor and have actually a positive effect on corruption levels?

A first brief examination of perception-based corruption measures provides no clear answer. The five countries most heavily affected by the crisis ¿ Greece, Ireland, Italy, Portugal, and Spain (GIIPS) ¿ display different developments after 2007: while in Greece and Italy, corruption levels seem to have deteriorated severely, Portugal and Spain do not show this grave negative effect, and in Ireland, the trend is even positive during the first crisis years ¿ and aggravates thereafter. It seems as if corruption levels in the individual countries were affected differently by the complex crisis developments ¿ but what could explain this variance?

According to the model by Alina Mungiu-Pippidi, corruption is the result of an equilibrium between resources for corruption (material resources, power) and constraints to corruption (legal and normative constraints). Now, as material resources for corruption have obviously decreased with the crisis, should this not lead to less corruption? How are the other components of the equilibrium affected?