"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

Intensity of Competition, Corruption Risks, and Price Distortion in the Hungarian Public Procurement – 2009-2016


December 29, 2017


Tóth, I. J. and Hajdu, M. 2017. Intensity of Competition, Corruption Risks, and Price Distortion in the Hungarian Public Procurement – 2009-2016. Working Paper Series: CRCB-WP/2017:2, CRCB, Budapest.

The report was carried out by CRCB for the European Commission and 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. We also analyse 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 evidence 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 exceeded at least 2,090-3,300 billion HUF (6.7-10.6 billion Euros) and comes to 15-24% of the total spending by public procurement in the period of 2009-2016. Based on our results we point out that the EU funding has perverse effects in Hungary in the public procurement: it helped to reduce the intensity of competition, to increase the level of corruption risk and the weight of price distortion, and it generated the growth of the estimated direct social loss due to weak competition and high level of corruption risks during the period.


Figures & Data (xlsx)