How much money does corruption cost us?
Bribery, kickbacks, and other malpractices drain resources, increase the reputation of countries, and reduce their ability to grow.
BarcelonaCan you imagine having another €50 billion available each year for public and social services? It's an amount that exceeds the combined annual budget of the Generalitat (Catalan government), including the entire public sector, which manages more than €40 billion. And it's an astronomical amount, emerging from studies that attempt to quantify the cost of corruption cases such as that of Koldo García, former minister José Luis Ábalos, and the former number three of the PSOE (Spanish Socialist Workers' Party), Santos Cerdán. According to Transparency International, a non-governmental organization specializing in the subject, Spain last year scored 56 out of 100 on the corruption perception index, which analyzes 180 countries (0 being very clean and 100 being very corrupt), that is, close to the red light and far from the best-performing countries (88) or Singapore (84).
For some time now, studies have attempted to calculate the impact of illegal commissions, bribes, and other malpractices. But it's not just a matter of public resources going into private pockets or political parties; this situation reduces a country's attractiveness and ability to attract investment, and therefore affects growth. The effects of corruption are direct—misappropriation of public funds, cost overruns in contracts, or fraud—and indirect—the loss of prestige of the country, loss of competitiveness, reduction of foreign investment, or institutional deterioration. And there is also a social and political aspect: loss of confidence in institutions, polarization, or political disaffection.
As with the underground economy, analyses of these types of costs are estimates, as they involve resources that escape fiscal control. The largest estimate was made by the Greens group in the European Parliament, which calculated that corruption cost Spain around 90 billion euros a year, 10% of the total for the European Union (EU) and the equivalent of almost 8% of its GDP, that is, of the wealth it generates in a year.
1,200 euros per person
For its part, the National Commission on Markets and Competition (CNMC) published a study in 2017 focused on public procurement in Spain, which represents between 10% and 20% of the gross domestic product (GDP). This analysis estimated that overcosts due to illegal practices amounted to around €50 billion each year. Specifically, around €48 billion, which would currently be closer to €60 billion, taking into account inflation. Corruption cases have not disappeared and arise periodically and in many legislatures and administrations, as seen with the Gürtel case, the Púnica case (PP), or the Palau case (formerly Convergencia). Taking into account the updated figures, the cost of corruption distributed among all Spanish inhabitants would amount to around €1,200 per person, based on the current census, the equivalent of what many workers earn per month.
One of the most recent cases related to rough play in public contracts was the €203.6 million fine that the CNMC imposed in 2022 on six of the main Spanish construction companies – Acciona (€29.4 million); Dragados, of the ACS group (€57.1 million); FCC (€40.4 million); Ferrovial (€38.5 million); Obrascón Huarte Lain, today OHLA (€21.5 million), and Sacyr (€16.7 million) – "for having altered thousands of public bids for construction and civil works infrastructure over twenty-five years. Some of these, such as Acciona, Ferrovial or Sacyr They appear in the conversations recorded by Koldo García that are in the hands of the Central Operative Unit (UCO) of the Civil Guard.
A report by the BBVA Foundation and the Valencian Institute of Economic Research (Ivie) stated that if Spain were to raise its institutional quality to the level corresponding to its development, it would have a long-term potential GDP per capita increase of around 20% (10.7% according to the most conservative assumptions). And, if the impact were to occur over a period of about fifteen years, this would mean an increase in the average annual growth of the economy during this period of around 1.2 percentage points. About 10 billion euros would be generated annually.
The problems, or the disease, seem to have been detected: an institutional deficit that in Spain is concentrated in regulatory quality, respect for the law and contacts, and, especially, in the control of corruption, according to the study by the BBVA Foundation and Ivie. This was anticipated by economists Daron Acemoglu and James A. Robinson in their book Why countries fail (Deusto, Barcelona, 2012), where they warned that it is the institutions that make a state prosper or falter when they do not function properly.
In any case, despite the differences between countries, this is not a phenomenon unique to Catalonia or Spain. The United Nations made this clear during a meeting of its Security Council. It pointed out that corruption can also be a driver of conflict, through illicit trafficking in arms, drugs, and people, terrorism, and violent extremism. Citing estimates from the World Economic Forum, it stated that the global cost of corruption is at least $2.6 trillion a year, or 5% of global gross domestic product (GDP), adding that, according to the World Bank, businesses and individuals pay more than $1 trillion in bribes each year.
