# Conclusion

This paper uses comprehensive, economy-wide administrative data to assess corruption risks in North Macedonia’s public procurement and their implications for overpricing of contracts. It also looked at the networked nature of contracting risks and how some of these networks develop into state capture formations.

The analyzed data points at persistently high risks of corruption in North Macedonia, compared to EU countries. For example, the single bidding rate of North Macedonia is very similar to the Slovak Republic, Hungary and Bulgaria, but considerably higher than core Western European countries such as Germany or France. The overall corruption risk level slightly decreased throughout 2011-2022, with, for example, the single bidding rate remaining around 30%.

This paper finds a strong association between corruption risks and relative prices. The effect of the composite risk indicator, Corruption Risk Index (CRI), on relative prices is estimated to be strong, with the CRI score moving from its maximum (1) to its minimum (0) leading to 17.9% lower prices. Looking at individual risk factors points at actionable, directly influenceable levers for policy makers. Factors estimated to lead to higher prices are the type of procedure, length of advertisement period, and supplier dependence on a buyer. For instance, greater use of more competitive and open procedures or providing more time for suppliers to prepare bids are found to be associated with lower relative prices. Other factors, such as single bidding and supplier dependence on a buyer are only indirectly influenceable, but programs aimed at stimulating competition, reducing the documentation burdens on suppliers or eliminating transaction costs can create a more favorable environment for higher competition, and consequently lower the relative prices. These factors are also likely to influence prices considerably as for example single bidding is associated with a 7.2% increase in relative prices compared to multiple bidding (i.e. a tender receiving two or more bids).

Data analysis also reveals indications of state capture patterns. There are groups of suppliers and buyers with high corruption risk contracting relationships among them. This suggests that purchasing authorities with high CRI scores are more likely to attract suppliers with similarly high risks. The repeated contractual relationships between buyers and suppliers within these groups are likely to be more susceptible to state capture risks compared to other communities in the contracting network. However, the change in government in 2017 has led to the weakening of state capture patterns with the previously central capture groups moving outwards, to the periphery. Parallel to this, the center of the contracting network is now more populated by lowrisk communities, suggesting a lower degree of network capture.

Our analysis is not without limitations. Due to data limitations, we had to focus the price analysis on single lot tenders, which significantly reduces our sample. Notwithstanding the importance of relative price analysis in identifying actionable policies that can generate savings, there are further measures of value for money that can be used such as unit prices paid for standardized goods. In addition, the analysis could be further improved by more reliably identifying unique organizations by their legal identifiers. Further work could imply using advanced data science 45