Corruption, government turnover, and public contracting market structure – Insights using network analysis and objective corruption proxies

Fazekas, M., Skuhrovec, J., Wachs, J. (2017): Corruption, government turnover, and public contracting market structure – Insights using network analysis and objective corruption proxies. GTI-WP/2017:02, Budapest: Government Transparency Institute.

Many policymakers and researchers study and debate how to control and limit corruption. Few have examined the mechanisms by which corruption distorts markets and how they may be influenced to mitigate negative effects. To develop this new perspective, we study how corruption effects the structure of public contracting markets modelled as networks of connected buyers and suppliers. We examine the impact of political power-sharing on these networks via government turnover timing …

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Compliance and strategic contract manipulation around single market regulatory thresholds – the case of Poland

Tóth, B., Fazekas, M. (2017): Compliance and strategic contract manipulation around single market regulatory thresholds – the case of Poland. GTI-WP/2017:01, Budapest: Government Transparency Institute.

The functioning of the EU’s single market in government contracts crucially hinges upon compliance with and adequate use of EU-wide rules. However, evidence from a range of countries suggest that these rules are circumvented and manipulated tenders are used to pursue protectionist or favouritistic agendas. In order to test whether such claims also apply to Polish public procurement we investigate the extent of non-compliance and manipulation around the regulatory thresholds defining whether national or EU-rules …

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Uncovering High-Level Corruption: Cross-National Corruption Proxies Using Government Contracting Data

Fazekas, M and Kocsis, G (2015). Uncovering High-Level Corruption: Cross-National Corruption Proxies Using Government Contracting Data. British Journal of Poltical Science. Published online: 24 August 2017. DOI: https://doi.org/10.1017/S0007123417000461

Measuring high-level corruption and government favouritism has been the object of extensive scholarly and policy interest with relatively little progress in the last decade. In order to address the lack of reliable indicators, this article develops two objective proxy measures of high-level corruption in public procurement: single bidding in competitive markets and a composite score of tendering ‘red flags’. Using publicly available official electronic records of over 2.8 million government contracts in …

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A comprehensive review of objective corruption proxies in public procurement: risky actors, transactions, and vehicles of rent extraction

Fazekas, M., Cingolani, L. and Tóth, B. (2016). A comprehensive review of objective corruption proxies in public procurement: risky actors, transactions, and vehicles of rent extraction. GTI-WP/2016:03, Budapest: Government Transparency Institute.

This paper can provide a comprehensive review of quantitative corruption proxies, conceptualise how different indicators capture different aspects of corruption, and identify gaps in the measurement landscape. Institutionalised, well-established corruption in government contracting aims to bypass fair and open competition in order to allocate contracts to companies belonging to the corrupt group. This requires at least i) corrupt transactions allowing for rent generation, ii) particularistic relations underpinning collective action …

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Corrupt Contracting: Partisan Favouritism in Public Procurement

David-Barrett, L and Fazekas, M (2016). Corrupt Contracting: Partisan Favouritism in Public Procurement. GTI-WP/2016:02, Budapest: Government Transparency Institute.

For politicians seeking to use a clientelist approach to achieve political and private gain, i.e., to prolong their hold on power and maximize personal profit, control of government contracting is a key tool. We theorise that politicians wishing to exploit government contracting for such ends will seek to increase their influence over three stages of public procurement – policy formation, implementation and monitoring – but that their efforts can be constrained by institutional controls and checks. We examine these influence strategies and …

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Breaking the cycle? How (not) to use political finance regulations to counter public procurement corruption

Fazekas, M and Cingolani, L (2017). Breaking the cycle? How (not) to use political finance regulations to counter public procurement corruption. In: The Slavonic and East European Review, Vol. 95, No. 1, January 2017. URL: http://www.jstor.org/stable/10.5699/slaveasteurorev2.95.issue-1

There are widespread perceptions and countless documented cases of tight-knit networks of politicians and businessmen colluding for allocating public procurement contracts in return for political party donations. In the absence of systematic evidence, neither the magnitude of the problem nor the effectiveness of policies curbing such corruption is well-understood. In order to advance our understanding of these phenomena, this paper tests whether political financing …

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Corruption in EU Funds? Europe-wide evidence on the corruption effect of EU funded public contracting

Fazekas, M. and Tóth, I. J. (2015). Corruption in EU Funds? Europe-wide evidence on the corruption effect of EU funded public contracting. GTI-WP/2015:01, Budapest: Government Transparency Institute.

It is theoretically ambiguous and empirically contested whether EU Funds contribute to lower corruption and better governance or the opposite. Many recipient countries benefit to a substantial degree with allocations amounting to 2-4% of their annual GDP. A range of positive and negative cases has been uncovered by the European Commission, national governments and the media, however, there has been no Europe-wide quantitative evaluation looking at the micro-level, arguably where corruption takes place. …

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Toolkit for detecting collusive bidding in public procurement – With examples from Hungary

Tóth, B, Fazekas, M, Czibik, Á, Tóth, I. J. (2014). Toolkit for detecting collusive bidding in public procurement – With examples from Hungary. GTI-WP/2014:02, Budapest: Government Transparency Institute.

Based on a synthesis of literature to-date, this paper provides a flexible indicator set deployable as a toolkit across many countries for detecting collusive bidding in public procurement. While no one-size-fits-all approach exists in detecting collusion, robust elementary indicators and analytical tools for adapting them to local contexts can be developed. The paper delivers a conceptual definition and theoretical discussion for each indicator as well as a complex empirical assessment using data …

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From corruption to state capture: A new analytical framework with empirical applications from Hungary

Fazekas, M., Tóth, I. J. (2014). From corruption to state capture: A new analytical framework with empirical applications from Hungary. GTI-WP/2014:01, Budapest: Government Transparency Institute.

State capture and corruption are widespread phenomena across the globe, but their empirical study is still highly challenging. This paper develops a new conceptual and analytical framework for gauging state capture based on micro-level contractual networks in public procurement. To this end, it first establishes a robust measure of corruption risks in public procurement transactions focusing on relationships between pairs of issuers and suppliers. Second, it searches for clusters of high corruption risk organisations in …

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Are EU funds a corruption risk? – The impact of EU funds on grand corruption in Central and Eastern Europe

Fazekas, M., Chvalkovska, J., Skuhrovec, J., Tóth, I. J., King,  L. P. (2013). Are EU funds a corruption risk? – The impact of EU funds on grand corruption in Central and Eastern Europe. GTI-WP/2013:03, Budapest: Government Transparency Institute.

The paper explores the impact of EU funds on institutionalised grand corruption in public procurement between 2009-2012 in three countries: Czech Republic, Hungary, and Slovakia. We analyse a unique pooled database containing contract-level public procurement information for all three countries. We develop a composite corruption risks indicator based on the incidence and logical structure of ‘red flags’ in individual public procurement transactions. …

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