Political favouritism in Croatian public procurement

Despite having a strong law which aims to set high standards, a large share of public procurement in Croatia is executed by contracting authorities that are highly vulnerable to political influence. This creates opportunities for politicians to influence the allocation of contracts in a particularistic manner, rather than allowing market conditions and competition to determine allocations. The potential for corruption is exacerbated because senior and mid-level managers in these contracting authorities have considerable discretionary power to shape public procurement procedures, and are weakly constrained by other institutional controls or oversight. That is, there are considerable opportunities for corruption while constraints are inadequate, an environment in which particularism might be expected to flourish (Mungiu-Pippidi et al. 2011). Moreover, our empirical analysis of public procurement in the construction sector over 2011-13 reveals evidence consistent with favouritism and political influence in both procedures and outcomes. This raises questions about why such a pattern has emerged and been allowed to continue.