Abstract
Incoming governments sometimes abuse their power to manipulate the allocation of government contracts so as to buy loyalty from cronies. While scandals suggest such practices are relatively widespread, the extent of such partisan favoritism is difficult to measure and the conditions under which it flourishes under-theorized. Drawing on theory regarding the role of institutions as constraints on corruption, we identify three spheres of political influence over government contracting and show how elites can manipulate two of those spheres to increase their opportunities to influence the procurement process and minimize external accountability, facilitating the corrupt allocation of contracts to partisan allies. Using an innovative big data methodology, we then identify the effects of a change in government on procurement markets in two countries, Hungary and the United Kingdom, which differ in terms of political influence over these institutions. We find that politically-favored companies secure 50–60% of the central government contracting market in Hungary but only 10% in the UK.
Highlights
An important form of grand corruption occurs when political elites allocate state resources in exchange for political support, a practice traditionally known as clientelism (Hicken 2011)
If both of our indicators point in the same direction for a given company, i.e., the company’s pattern of winning contracts changes after a change of government and the conditions in which it wins tenders are associated with numerous red flags, we suggest that this is indicative of a company benefitting from partisan favoritism
In model 2, a 1 unit increase in the log contract value won in the past quarter results in a 0.2 unit increase in the following quarter. Such weak path dependence is disrupted by the 2010 change of government, which suggests political influence on a purchasing function otherwise driven by economic considerations
Summary
An important form of grand corruption occurs when political elites allocate state resources in exchange for political support, a practice traditionally known as clientelism (Hicken 2011). Politicians are motivated to corrupt the procurement process partly to channel private gains to themselves and their families and because the strategic allocation of state resources buys loyalty which in turn helps them to consolidate their power and gain an advantage over their political competitors This ‘loyalty’ comes in many forms, including donations to political parties or individual campaigns, direct bribes or ‘kickbacks’ on contracts, and sometimes inkind provision of services — as in Turkey, where media companies that benefit from government contracts provide supportive coverage of the government in return (Emek and Acar 2015). While capture of policy formation may be the most efficient channel, this is curtailed in the EU context because much of the scope and nature of national laws on public procurement is prescribed by the EU Public Procurement Directive. There is variation in how the Directive is transposed into national law (Fazekas et al 2015) but, by and large, national
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
