The role of favouritism in municipal government contracting

Companies rely on courts to resolve business debates and ask for financial information before contracting. Courts are low-cost and financial accounts reflect the realities in many developed economies. In the less developed ones, not so much: the underlying trust for contracting comes from personal relationships instead.

Public bodies face the same problems as private companies. In the lack of efficient courts and reliable information on suppliers, they are incentivised to contract with personally known, local companies that they trust. However, this kind of favouritism often hides corruption. Therefore, favouritism in public contracting can be used both in the public interest (alleviating contractual risks) and in the private interest (corruption).

This dichotomy is particularly interesting in municipal governments. They can rely on informal contract enforcement and information on local suppliers. Local politicians are easy to hold accountable as elections make it possible to replace them if they misuse favouritism for corruption. My research tries to dismantle favouritism using detailed data on municipal public contracts and awarded companies from the Czech Republic, Hungary and Sweden.

The other half of this evening will be PhD Candidate Kadance Leung with Double exile: negotiating otherness in the translations and poetry of Valerii Pereleshin.