Corruption Research Center Budapest Working Papers No. CRCB-WP/2014:01
28 Pages Posted: 29 Nov 2014
Date Written: November 28, 2014
State capture and corruption are widespread phenomena across the globe, but their empirical study is still highly challenging. This paper develops a new conceptual and analytical framework for gauging state capture based on micro-level contractual networks in public procurement. To this end, it first establishes a robust measure of corruption risks in public procurement transactions focusing on relationships between pairs of issuers and suppliers. Second, it searches for clusters of high corruption risk organisations in the full contractual network of issuers and suppliers. These clusters and the density of corrupt links in them suggest state capture. Third, it employs this analytical framework to systematically explore how the radical change in governing elite composition in Hungary in 2009-2012 impacted on patterns of state capture. Findings indicate the feasibility and usefulness of such micro-level approach to corruption and state capture. Better understanding the network structure of corruption and state capture opens new avenues of research and policy advice on anti-corruption efforts, budget deficit, market competition, and democratic contestation.
Keywords: public procurement, institutionalised grand corruption, social network analysis, state capture, elite power struggle
JEL Classification: D72, D73, H57
Suggested Citation: Suggested Citation
Fazekas, Mihaly and Tóth, István János, From Corruption to State Capture: A New Analytical Framework with Empirical Applications from Hungary (November 28, 2014). Corruption Research Center Budapest Working Papers No. CRCB-WP/2014:01. Available at SSRN: https://ssrn.com/abstract=2531701 or http://dx.doi.org/10.2139/ssrn.2531701