Corruption risk and EU funding in public procurement across EU member states, 2007–2023

What the paper says

Abstract Aid and subsidies can support development by addressing resource gaps, improving infrastructure, and strengthening institutional capacity. However, both theoretical and empirical research also highlights the potential adverse effects of aid—particularly in weak institutional environments—where it can undermine accountability, facilitate rent-seeking and corruption, and entrench corrupt elites. A key question, therefore, is how EU subsidies correlate with levels of corruption. This paper investigates this question using public procurement contract data from EU Member States between 2007 and 2023. The analysis draws on contract-level data from the EU's Tenders Electronic Daily (TED) database, which contains over 8.2 million contracts from the 2007–2023 period. The findings reveal that, after controlling for various characteristics of public procurement contracts, EU-funded contracts are associated with higher levels of corruption risk. This result holds across both traditional corruption risk indicators, such as the proportion of non-competitive contract awards, and alternative indicators better suited to capturing the institutional context of corruption. We observe a strong positive correlation between EU subsidies and corruption risk in Western European countries as well. These findings carry important policy implications: the European Commission should enhance its monitoring of EU-funded public procurement in all Member States, including those in Western Europe.