ECPR

Install the app

Install this application on your home screen for quick and easy access when you’re on the go.

Just tap Share then “Add to Home Screen”

ECPR

Install the app

Install this application on your home screen for quick and easy access when you’re on the go.

Just tap Share then “Add to Home Screen”

Factors Affecting the Corruption Risks at the Level of Local Government

Elections
Local Government
Courts
Corruption
Empirical
Miklós Hajdu
Corvinus University of Budapest
Istvan Janos Toth
Miklós Hajdu
Corvinus University of Budapest

Abstract

This paper investigates the level of corruption risks and the effectiveness of competition at a municipal level based on public procurement data. It analyses the relationship of these with the level of human capital, economic development, and size of the settlement. The novelty of the research is that it focuses at the sub-national level and based on microdata (contract level data), whereas the earlier research has typically been based on perception data and investigated these issues at country level. We use Hungarian public procurement data from 2014 to 2018. The database of the analysis contains 16 thousand public procurement contracts of 291 Hungarian cities. The related raw data regarding public procurement contracts for municipalities was extracted from the homepage of the Hungarian Public Procurement Authority by the Corruption Research Center Budapest (CRCB). The results suggest that the level of risk of corruption is higher in the smaller settlements, and settlements with lower levels of human capital. Behind this, we suppose two mechanisms. On the one hand, if the level of education and income in a town is higher, it is easier for the local government to recruit well-educated and experienced public procurement experts from the local labour market, and to expand the administration staff of the local government with well-educated experts. These experts will act efficiently, and they are better able to help the local government of towns control corruption in public procurement more effectively. On the other hand, if a town has a higher level of education, a higher income level, and a higher business density, then it is more likely that the local citizens, the local entrepreneurs, can force the local authorities to control corruption. Public procurement corruption, as a type of white-collar crime, is often carried out through complex transactions that are more easily understood by those who are better educated. Also, the problem of public procurement corruption requires knowledge of abstract concepts (e.g., market price, competition, rent, welfare loss, etc.), which are more understandable to educated people. Therefore, in towns with a poor level of education, low income, and weak business density, the local social actors, that could enforce corruption control are naturally weaker. Additionally, we found that the turnout of the municipal elections also correlate with the corruption risk indicators, indicating that the voters’ activity may enforce the integrity of the local governments. However, the results suggest that actually the educational attainment is the characteristic that mostly determines the local public procurement corruption risks.