September 17, 2018
Tóth, I. J., & Hajdu, M. (2018). Cronyism in Hungary: an empirical analysis of public tenders 2010-2016
In this paper, we use a public procurement database that contains data from more than 230,000 public tenders from 1997 to 2017. The analysis is based on data from 126,330 public procurement contracts from 2010 to 2016. The research was supported by the Hungarian National Scientific Fund (OTKA, K116860). The focus of the analysis is public tenders (without framework agreements) awarded to companies associated with cronies and family members of Hungarian Prime Minister Viktor Orbán: Lőrincz Mészáros, István Garancsi, István Tiborcz, and Lajos Simicska (we will refer to this group as the MGTS). During the analysis, we compare the corruption risks, the intensity of competition, and the strength of price competition between tenders won by crony companies and those won by other, ordinary Hungarian firms. We use indicators as a dummy variable, the single bidder to measure corruption risks, the index of intensity of competition, and the relative price drop, RPRD, to measure the intensity of competition. Our results indicate the presence of political favoritism in Hungarian public procurement during the period under examination. The corruption risk is significantly higher, and the intensity of competition is considerably lower, in tenders won by MGTS firms than in those won by ordinary Hungarian companies. The median RPRD values for tenders won by MGTS firms are very close to the median value for tenders with the highest corruption risk and the lowest competition intensity.
The paper (PDF)
The figures (XLSX)
Presentation at the conference “Kornai Janos 90 years” (PDF)