The increased focus on marketizing mechanisms and contracting‐out operations following the New Public Management reform agenda has sparked a debate on whether the close interactions between public and private actors might drive corruption in the public sector. The main response to those worries has been increased transparency, but so far empirical evidence of its efficiency remains scant and mixed. This article argues that the beneficial effects of transparency on corruption are contingent on type of transparency, and in particular, who the intended receiver of the information is. Drawing on newly collected data of more than 3.5 million government contracts between 2006 and 2015, the analysis shows that overall tender transparency reduces corruption risks substantially, yet that the effect is largely driven by ex ante transparency, that is, transparency that allows for horizontal monitoring by insiders in the bidding process.

Government contracting is crucial for defining the quality of government and public services because it amounts to about 29% of government spending. However, regional quality of government indicators, especially for public spending, are largely missing. We assess the quality of public spending by transparency, competition, efficiency and corruption using a novel database of 4 million contracts from the EU-28 between 2006 and 2015. We find that public spending quality is associated with gross domestic product (GDP)/capita, the European quality of government index (EQI) and public sector meritocracy. We confirm large within-country regional variations, but also find considerable change over time: the steady deterioration of performance in old European Union member states.

In this chapter we study corruption risks in EU defence procurement. Defense procurement has long been thought to present significant potential for corruption and state capture. Using a large dataset of contracts covering nearly ten years and applying an objective corruption risk indicator, we find strong empirical support for this hypothesis. In nearly all countries our corruption risk indicator is higher for military contracts than for contracts in general. By mapping national markets as complex networks, we find that risks are significantly clustered, suggesting potential islands of state capture. The centralization of corruption risk varies from country to country: in some corruption risk is significantly higher in the periphery, while in others it is significantly higher in the center of the market. We argue that network maps of procurement markets are an effective tool to highlight hotspots of corruption risk, especially in the overall high risk context of defense contracting.

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