anti-corruption convention, contagion of corruption, government effectiveness, rule of law, second-best policy
The paper examines possible EU enlargement in Western Balkans from the point of view of corruption. Transparency International warns from the risks of acceleration and spreading of corruption in economic integration between states with different levels of integrity, and draws ambitious guidelines for optimal anti-corruption policy. The paper aims for policy advices concerning proper policy. The method is, first, to compare the candidate states to the current 28 EU states in terms of corruption and the quality of governance. Second, the paper briefly surveys the relevant literature on the macroeconomic effects of corruption, which shows that in countries that are imprinted by both corruption and bad governance, particularly in terms of rule of law and government effectiveness, a straightforward attac on corruption is hopeless, and it may even be economically detrimental. The conclusion is that following the guidelines given by Transparency International is a too winding path to take, and it is almost impossible to set full integrity as a precondition to entry. Optimal policy to avoid contagion of corruption is to focus not on the candidates, but on the existing EU28, and particularly on their close neighbors. This can be done best by concentrating on international business transactions, namely by strict enforcement of the OECD anti-corruption convention. The EU should pressure all member states to uniform commitment to it. After the entrance, rooting out of corruption and enhancement of formal governance in the new member states can then be carried out in due course.