Portal de Murcia
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Two professors from the University of Murcia, Fracisco Alcalá and Fernando Jiménez, coordinated the report The economic costs of the institutional quality deficit and corruption in Spain, prepared in the framework of the collaboration of the BBVA Foundation and the Ivie, which ensures that raising the institutional quality in Spain up to the level that would correspond given the productivity of the country would allow to increase the GDP per capita by 16% in a period of about 15 years.
According to the conclusions of this study, the economic costs of the institutional quality deficit and corruption go far beyond the amount of unduly appropriated public funds.
Corruption decreases the profitability of business projects, increases their uncertainty, reduces investment levels and diverts human and financial resources towards influence in public decision-making bodies instead of assigning them to productive activities, and directs efforts towards the search for privileges discouraging entrepreneurship and innovation.
It translates, finally, into lower productivity, higher unemployment and lower wages than would be possible with technology and available human capital.
According to Francisco Alcalá, professor of Fundamentals of Economic Analysis, the positive impact that the improvement of institutional quality over GDP would have would be indirectly, through mechanisms that would increase investment and productivity and, with them, the production and job.
The greater legal security, the reduction of corruption, the elimination of administrative obstacles, the better regulation, the greater competition, etc.
they would incentivize national and foreign investment, make entrepreneurship and innovation easier and more profitable, and improve the allocation of private and public resources to more productive activities.
These estimates are based on the work of a large number of researchers in Economics who, over the last two decades, have placed institutional quality among the fundamental factors for economic development.
These investigations have allowed estimating the average cost of low institutional quality in the countries, in terms of per capita income and productivity, and are the basis for the calculations made in this report.
The quality of Spanish governance institutions is between 20% of the countries with the highest level in the world, according to the indicators of the Worldwide Governance Indicators (WGI), prepared for the World Bank and with information on 154 countries.
However, the results obtained by Spain are below what would correspond according to the development of its economy.
Spain obtains a value of 6.8 out of 10 in the combined indicator of institutional quality, against 8 of the average for Germany, France and the United Kingdom, which are advanced economy models.
However, it is also ahead of other Mediterranean economies such as the Italian and the Greek, whose average institutional quality barely reaches a value of 5.8.
The IVIE report includes recommendations to increase institutional quality in Spain, which is classified into three main lines of action: reinforcement of checks and balances of power, improvement of independence, quality and transparency of administration and improvement of the effectiveness of elections as selection and control mechanisms.
Among the concrete measures are issues such as improving the independence of the General Council of the Judiciary and the Constitutional Court, improving the law of criminal prosecution, eliminating inspections, reducing the number of positions of trust in the Administration, or ending the closed lists in the elections, so that voters can choose which politicians want to vote.
The full report can be found at:
https://www.fbbva.es/publicaciones/los-costes-economicos-del-deficit-calidad-institucional-la-corrupcion-espana/
Source: IVIE
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