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Public Procurement and Rent-Seeking: The Case of Paraguay

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  • Auriol, Emmanuelle
  • Flochel, Thomas
  • Straub, Stéphane

Abstract

A model of entrepreneurial choices in an economy with a corrupt public procurement sector is built, providing predictions along two main dimensions. First, corruption is more frequent in sectors where public institutions are large buyers. Second, firms favoured with corrupt contracts enjoy extra returns, so that procurement related activities attract the best entrepreneurs. A large scale microeconomic database, including all public procurement operations over a 4 year period in Paraguay, amounting annually to approximately 6% of the country’s GDP, is then used to corroborate these predictions.

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Bibliographic Info

Paper provided by Toulouse School of Economics (TSE) in its series TSE Working Papers with number 11-224.

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Date of creation: 18 Feb 2011
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Handle: RePEc:tse:wpaper:24174

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Keywords: Procurement; Corruption; Rent-seeking; Development;

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References

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  7. Besley, Timothy & McLaren, John, 1993. "Taxes and Bribery: The Role of Wage Incentives," Economic Journal, Royal Economic Society, vol. 103(416), pages 119-41, January.
  8. Auriol, Emmanuelle, 2006. "Corruption in procurement and public purchase," International Journal of Industrial Organization, Elsevier, vol. 24(5), pages 867-885, September.
  9. Mookherjee, Dilip & Png, I P L, 1995. "Corruptible Law Enforcers: How Should They Be Compensated?," Economic Journal, Royal Economic Society, vol. 105(428), pages 145-59, January.
  10. Ferraz, Claudio & Finan, Frederico S., 2007. "Exposing Corrupt Politicians: The Effects of Brazil’s Publicly Released Audits on Electoral Outcomes," IZA Discussion Papers 2836, Institute for the Study of Labor (IZA).
  11. Ritva Reinikka & Jakob Svensson, 2004. "Local Capture: Evidence From a Central Government Transfer Program in Uganda," The Quarterly Journal of Economics, MIT Press, vol. 119(2), pages 678-704, May.
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  14. Di Tella, Rafael & Schargrodsky, Ernesto, 2003. "The Role of Wages and Auditing during a Crackdown on Corruption in the City of Buenos Aires," Journal of Law and Economics, University of Chicago Press, vol. 46(1), pages 269-92, April.
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Cited by:
  1. Straub, Stéphane, 2014. "Political Firms, Public Procurement, and the Democratization Process," IDEI Working Papers 817, Institut d'Économie Industrielle (IDEI), Toulouse.
  2. Mihaly Fazekas & Istvan Janos Toth & Lawrence Peter King, 2014. "Anatomy of grand corruption: A composite corruption risk index based on objective data," IEHAS Discussion Papers 1403, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  3. Mihaly Fazekas & Istvan Janos Toth & Lawrence Peter King, 2013. "Corruption manual for beginners - "Corruption techniques" in public procurement with examples from Hungary," IEHAS Discussion Papers 1339, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.

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