ECONOMIC BRIEFS

EBRD report finds corruption in east, central Europe

Ten years of reform in Eastern Europe have brought with them a dramatic rise in corruption, one of the more unwelcome aspects of capitalism, according to the European Bank for Reconstruction and Development (EBRD).

The EBRD's annual Transition Report assesses how far the economies of central and eastern European have progressed and found that 34% of Slovak firms surveyed said they paid bribes frequently.

Bribes also hit small firms disproportionately hard, averaging 5.4% of annual corporate revenues compared with 2.8% for large firms. The EBRD said that the high incidence of bribery had come on the heels of the shift away from intrusive forms of state control in the economy.

"In other words, firms might be paying bribes to state officials to prevent the state from intervening in company decisions and from wasting management time," the report said. The EBRD noted that privatised firms did not show a greater propensity to pay bribes than other private firms, despite allegations of corruption in the privatisation process.

States which have weak central governments (such as Armenia, Azerbaijan and Georgia, the report said) have bribe levels which are the highest in the region. However, some of the most advanced countries in central Europe also figure prominently, with 32.7% of firms in Poland saying they bribed frequently, 31.3% in Hungary and 26.3% in the Czech Republic.

"There is no simple relationship between the extent of market-oriented reforms and the nature of the interaction between the state and enterprises. But the process of 'de-politicising' enterprises remains incomplete in all transition economies," the report said.

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