Anatomy of Grand Corruption: A Composite Corruption Risk Index Based on Objective Data

Corruption Research Center Budapest Working Papers No. CRCB-WP/2013:02

46 Pages Posted: 29 Sep 2013 Last revised: 5 Dec 2013

See all articles by Mihaly Fazekas

Mihaly Fazekas

University of Cambridge - Faculty of Human, Social, and Political Science

István János Tóth

Hungarian Academy of Sciences (HAS)

Lawrence P. King

Yale University - Department of Sociology

Date Written: November 1, 2013

Abstract

Although both the academic and policy communities have attached great importance to measuring corruption, most of the currently available measures are biased and too broad to test theory or guide policy. This article proposes a new composite indicator of grand corruption based on a wide range of elementary indicators. These indicators are derived from a rich qualitative evidence on public procurement corruption and a statistical analysis of a public procurement data in Hungary. The composite indicator is constructed by linking public procurement process ‘red flags’ to restrictions of market access. This method utilizes administrative data that is available in practically every developed country and avoids the pitfalls both of perception based indicators and previous ‘objective’ measures of corruption. It creates an estimation of institutionalised grand corruption that is consistent over time and across countries. The composite indicator is validated using company profitability and political connections data.

Keywords: public procurement, grand corruption, corruption technique, composite corruption risk index

JEL Classification: D72, D73, H57

Suggested Citation

Fazekas, Mihaly and Tóth, István János and King, Lawrence P., Anatomy of Grand Corruption: A Composite Corruption Risk Index Based on Objective Data (November 1, 2013). Corruption Research Center Budapest Working Papers No. CRCB-WP/2013:02. Available at SSRN: https://ssrn.com/abstract=2331980 or http://dx.doi.org/10.2139/ssrn.2331980

Mihaly Fazekas (Contact Author)

University of Cambridge - Faculty of Human, Social, and Political Science ( email )

Cambridge, CB3 9DD
United Kingdom

István János Tóth

Hungarian Academy of Sciences (HAS) ( email )

Orszaghaz utca 30.
Budapest, H-1502
Hungary

Lawrence P. King

Yale University - Department of Sociology ( email )

493 College St
New Haven, CT 06520
United States

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