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Transport infrastructure provision from roads to waterways involves large amounts of public funds in very complex projects. It is hardly a surprise that all across Europe, but especially in high corruption risk countries, it is a primary target of corrupt elites. This article provides a state-of-the-art review of the literature on the cost of corruption and estimates the level of corruption risks and associated costs in European infrastructure development and maintenance in 2009-2014 using novel data on over 40,000 government contracts. Two forms of corruption costs are investigated in the empirical section: 1) distorting spending structure and project design, and 2) inflating prices. Findings indicate that corruption steers infrastructure spending towards high value as opposed to small value investment projects. It also inflates prices by 30-35% on average with largest excesses in high corruption risk regions. Contrary to perceptions, corruption risks in infrastructure are decoupled to a considerable extent from the national corruption environment. Source data and risk scores are made downloadable at digiwhist.eu/resources/data.
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... Other studies have also found that greater corruption is associated with lower efficiency in public infrastructure contracts (Castro et al., 2014) and higher construction costs (Kenny, 2009), and corruption has negative impact on the quality of transportation infrastructure (Chen et al., 2020). Fazekas and Tóth (2018) indicate that corruption steers infrastructure spending towards high value as opposed to small value investment projects, and inflates prices by 30-35% on average. ...
... Corruption distorts the allocation of public funding (Dixit, 1998), and increases the investment costs through higher wages or material costs in awarding contracts or during the contract implementation (European Court of Auditors, 2013). Fazekas and Tóth (2018) apply regression analysis to 40,000 government contracts in Europe over the 2009-2014 period, and find that corruption can steer infrastructure spending towards high value investments in high corruption risk countries, and corruption is also likely to inflate the prices by about 30%-35% on average. Their study also provides a comprehensive review of the literature on the cost of corruption in transport infrastructure across the globe. ...
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... Second, corruption in the public procurement sector is likely to present a cost to the public budget by distorting the public spending structure, in particular biasing public investment toward highvalue, high-complexity investments and also toward new infrastructure, as opposed to spending on maintenance and operations (Fazekas & Tóth, 2018). In high-value projects, even a small fraction of the investment value amounts to large corruption rents, making them particularly attractive (Rose-Ackerman, 1999;Transparency International, 2008). ...
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... In addition, in the last years of the last century, Romania and almost all of Europe were hit by a recession (Gatejel, Grama, 2019). Additionally, problems with the development of transport infrastructure in the following years were aggravated by corruption (Fazekas, Tóth, 2018). However, the accession process of Romania, thanks to the large-scale cross-border cooperation, especially in the euroregions (Wendt, 2004a), supported by EU funding for the development of the road network (Clitan, 2015), gave impetus to new investments in the field of railway infrastructure. ...
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