"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

Analysing corruption as black holes – a study on Hungarian public procurement

June 22nd 2017

The presentation deals with three issues. (1) It presents the analytical framework of corruption risks and competititon intensity of public tenders used by CRCB;  (2) it deals with the results of report “Intensity of Competition, Corruption Risks and Price Distortion in the Hungarian Public Procurement – 2009-2016″ made by CRCB for the European Commission; (3) and it demonstrates some preliminary results on relationships between EU funding and cronyism in Hungary.

The report examines data from Hungarian public procurement in the period between 2009 and 2016. The data of 151,457 contracts were used for the analysis. The analysis focuses on information regarding the intensity of competition, price distortion, and corruption risks. The paper also analyses the performance of EU funded projects from these viewpoints. The results show that 2016 was a very special year from the aspect of the Hungarian public procurement, as there was a major decrease in the number of contracts and the ratio of public procurements with EU-fund was extremely low. The results also reveal some evidences on the presence of price distortion based on different approaches during the examined time period. Finally using several methods we estimate the volume of direct social loss due to corruption. According to the results the aggregated amount of estimated direct social loss due to overpricing exceeded at least 1,800-2,300 billion HUF (5.8-7.5 billion Euros) and comes to 10-17% of the total spending by public procurement in the period of 2009-2016.

The presenation ( pdf ).