European Journal on Criminal Policy and Research

, Volume 22, Issue 3, pp 369–397

An Objective Corruption Risk Index Using Public Procurement Data

  • Mihály Fazekas
  • István János Tóth
  • Lawrence Peter King
Article

Abstract

In order to address the lack of reliable indicators of corruption, this article develops a composite indicator of high-level institutionalised corruption through a novel ‘Big Data’ approach. Using publicly available electronic public procurement records in Hungary, we identify “red flags” in the public procurement process and link them to restricted competition and recurrent contract award to the same company. We use this method to create a corruption indicator at contract level that can be aggregated to the level of individual organisations, sectors, regions and countries. Because electronic public procurement data is available in virtually all developed countries from about the mid-2000s, this method can generate a corruption index based on objective data that is consistent over time and across countries. We demonstrate the validity of the corruption risk index by showing that firms with higher corruption risk score had relatively higher profitability, higher ratio of contract value to initial estimated price, greater likelihood of politicians managing or owning them and greater likelihood of registration in tax havens, than firms with lower scores on the index. In the conclusion we discuss the uses of this data for academic research, investigative journalists, civil society groups and small and medium business.

Keywords

Grand corruption Hungary Indicator Public procurement 

Supplementary material

10610_2016_9308_MOESM1_ESM.doc (501 kb)
ESM 1(DOC 501 kb)

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Copyright information

© Springer Science+Business Media Dordrecht 2016

Authors and Affiliations

  1. 1.Department of SociologyUniversity of CambridgeCambridgeUK
  2. 2.Government Transparency InstituteBudapestHungary
  3. 3.Institute of EconomicsHungarian Academy of SciencesBudapestHungary

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