Uncovering High-Level Corruption: Cross-National Corruption Proxies Using Government Contracting Data

Abstract

Measuring high-level corruption and government favouritism has been the object of extensive scholarly and policy interest with relatively little progress in the last decade. In order to address the lack of reliable indicators, this article develops two objective proxy measures of high-level corruption in public procurement: single bidding in competitive markets and a composite score of tendering ‘red flags’. Using publicly available official electronic records of over 2.8 million government contracts in 27 EU member states plus Norway in 2009-2014, it directly operationalizes a common definition of corruption: unjustified restriction of access to public contracts to favour a certain bidder. Corruption indicators are calculated at the level of contracts, but produce aggregate indices consistent with well-established country-level corruption indicators. Due to the common EU regulatory framework, indicators are consistent over time and across countries, while WTO regulations underpin global generalisability. Indicator validity is supported by correlations with well-established perception-based corruption indicators, and novel micro-indicators such as prices and supplier registration in tax havens. The utility of the novel indicators is demonstrated by using them to explain the effect of deregulation on corruption risks at the country level. In order to facilitate wide use of the data and indicators by researchers, journalists, NGOs, and governments, they are made publicly available.