"When you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind; it may be the beginning of knowledge, but you have scarcely, in your thoughts, advanced to the stage of science, whatever the matter may be."
Lord Kelvin

Competitive Intensity and Corruption Risks in the Hungarian Public Procurement 2009-2015


August 20 2016

István János Tóth &  Miklós Hajdu. 2016. Competitive Intensity and Corruption Risks in the Hungarian Public Procurement 2009-2015. CRCB Short Papers/2016:1

This short paper examines data from Hungarian public procurement in the period 2009-15. The data from 127,776 contracts were used for the analysis. The analysis focuses on information regarding the competitive intensity, price distortion, and corruption risks. We also analyze the performance of EU funded projects from these viewpoints. The results show that between 2009-15 the Hungarian public procurement is characterized by a reduction in competition, and an increase in the number of procurement without competition, reduced transparency, and rising tendency toward price distortion and corruption risks. The EU funded tenders have worse performance in case of corruption risks, competitive intensity, and transparency, compared with Hungarian-funded ones. The former ones are characterized by weaker competition, lower transparency, a higher level of price distortion, and higher corruption risks. The result points out the effects of crony capitalism on weakening competition and increasing price distortion, especially in EU funded public procurement. In Hungary the EU funds – besides their hypothetical positive influence on the development of the Hungarian economy – have certainly a special and perverse effect: they foster the practice of political favoritism and fuel crony capitalism.


keywords:  public procurement, corruption risk, corruption, price distortion, crony capitalism

Paper (pdf)