6.7 billion Euros per year is the invisible cost of corruption that is holding back the Western Balkans

“Western Balkans Cost of Corruption Index 2025” is the first regional publication of its kind produced by ALTAX Observatory, which builds for the first time an analytical instrument that measures not only the perception of corruption, but the real economic cost that corruption imposes on the Western Balkan countries.
Through the WB6 Corruption Cost Index (WB6-CCI), ALTAX brings a new regional approach that treats corruption as a hidden tax on economic development, institutional productivity and long-term growth potential.
Corruption in the region has traditionally been treated as an ethical, legal or reputational problem.
Although these dimensions remain important, they fail to fully explain the structural economic damage that corruption produces every year on the economies of the Western Balkans. For this reason, the publication raises a fundamental question, not why corruption exists, but how much euros it costs the regional economy and how it affects the economic future of the region.
WB6 Corruption Cost Index is built precisely to answer this question.
Existing international instruments, such as Transparency International’s Corruption Perceptions Index, the EBRD’s BEEPS or the World Governance Indicators, provide important insights into the perception of corruption and institutional quality beyond the Western Balkans.
However, they fail to produce a monetary assessment of economic losses and do not identify the concrete mechanisms through which corruption harms development. The WB6-CCI fills this gap, shifting the analysis from the perceptual dimension towards the economic measurement of the real cost of corruption.

The analytical architecture of the index is built on approaches used in governance diagnostics by the IMF, OECD and the World Bank, elevating the analysis from an institutional commentary to a structural macroeconomic assessment. In this context, corruption is treated as a factor that reduces economic productivity, increases business operating costs, weakens the efficiency of public finances, hinders investment and reduces the development potential of the region.
ALTAX aims to make the WB6-CCI the annual regional reference instrument for European institutions, international organizations, donors, investigative media and policymakers.

According to the WB6-CCI 2025 average reference scenario, corruption costs the Western Balkans region up to 6.7 billion euros annually, equivalent to 3.5–4.6% of regional Gross Domestic Product.
Serbia represents the largest absolute risk, bearing around 48% of the total regional cost, or approximately 3.2 billion euros per year, while Bosnia and Herzegovina presents the most critical institutional risk as a result of its deep governance and administrative fragmentation.

The study also finds that structural corruption costs the region 0.8–1.4 percentage points of real GDP growth each year. If the current trend continues without deep reforms, by 2035 the region’s economies could cumulatively lose €18–28 billion in unearned GDP, a cost that the publication considers equivalent to the loss of an entire generation of economic development.

Another critical dimension addressed by the publication is the structural drain of human capital. Every year, around 40,000–60,000 young people with higher education (net) leave the region, generating a loss of human capital worth €2–3 billion per year. According to the analysis, this loss remains largely unrecorded in official fiscal and budgetary statistics, although its impact on productivity and long-term development potential is substantial.

The publication also analyses the relative inability of the countries in the region to effectively absorb European funds. According to the WB6-CCI, the region absorbs only 45–55% of the available potential of European funds, while Bosnia and Herzegovina records the lowest level, with only 35–40% absorption. The effective economic loss, including the fiscal multiplier effect, is estimated to reach 1.3–2.4 billion euros of GDP each year.

One of the strongest conclusions of the publication is that the Western Balkans remain 8–22 years away from convergence with European standards of governance and institutional integrity. The difference of around 25 points in corruption indicators between the region and the European Union average translates into up to 13,400 euros of potential GDP lost per citizen of the region by 2035.

However, the publication emphasizes that the fight against corruption should not be seen only as a political or moral imperative, but as the economic investment with the highest strategic return for the region. According to WB6-CCI modeling, every euro effectively invested in anti-corruption reforms can generate 3–5 euros of additional GDP over a ten-year period.

The “Western Balkans Cost of Corruption Index 2025” thus represents a first attempt to