November 30, 2021
Tóth, I. J. and Hajdu, M. 2021. Political favoritism in public tenders in Hungary. Analysis of the odds of winning. Working Paper Series: CRCB-WP/2021:1. Budapest: CRCB.
The paper investigates the crony system in Hungary based on data of more than 227,000 public tenders from 2005 to 2020. The paper’s novelty is the analysis of odds of winning of crony and ordinary companies in public procurement that is a new approach to measure the strength of political favoritism and investigate crony system. We consider crony companies whose owners have family or friendships with the Hungarian Prime Minister (Viktor Orban) or one member of his government. The results point out that the crony companies have very high odds of winning. Their odds are significantly higher than those of ordinary Hungarian companies. We interpret these results as a sign of political favoritism and the prevalence of the crony system.