A Key Issue Leading to Economic Downturn: the Eurozone Debt Crisis - Essay Example

The various dynamics associated with the occurrence of corruption makes it the effect of corruption on the economy very varying. On the whole, it can be said that the more widespread cases of corruption within a given economy is, the larger the effect that will be felt. It is against this background that economists have for long sought to establish the relationship that exists between corruption and economic progress. As far as the relationship between corruption and economic progress is concerned, opinions remain largely divided in both theory and principle.

Whereas some see a possible coexistence between corruption and development (Kang 59), another school of thought argues that corruption and development cannot coexist and that corruption is the biggest obstacle to the economic development of a country (Keefer and Knack79). There are actually some extremist economists who posit that not only does corruption act as an obstacle to economic development but that corruption could be a key issue leading to an economic downturn. Knowing that an economic downturn is a period of business cycle contraction and slowdown in economic activity (Werlin 782), one would see corruption as a very serious canker with the worse consequential economic effects.

But until there is some level of empirical research that justifies the relationship between corruption and economic downturn, this assertion cannot be openly accepted. 1.2 Statement of the Problem As globalization acts as a catalyst that joins all parts of the world together as a single economic platform, one cannot pretend that the economic climate of one part of the world will not affect the global economic outlook (Kang 76). It is for this reason that cases of economic downturn or financial crisis in any part of the world must remain an important deliberative issue for all.

Indeed the issue of the impact of the financial crisis in one part of the world affecting the overall global economy becomes even more serious when the region or country in question is such a powerful contributor to the global economy as the Eurozone. Since the end of 2009, the European debt crisis, also known as the Eurozone crisis or European sovereign debt crisis has become a longstanding debt crisis that has plagued a number of Eurozone members (Ayodele and Kehinde 107).