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Public Procurement and Rent-Seeking: The Case of Paraguay

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

Abstract

A model of entrepreneurial choices in an economy with a corrupt public procurement sector is built, providing predictions along two dimensions. First, corrupt public institutions operate by offering contracts without competition and more corrupt entities channel larger share of their budget in this way. Second, these firms 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.

Suggested Citation

  • Auriol, Emmanuelle & Straub, Stéphane & Flochel, Thomas, 2016. "Public Procurement and Rent-Seeking: The Case of Paraguay," World Development, Elsevier, vol. 77(C), pages 395-407.
  • Handle: RePEc:eee:wdevel:v:77:y:2016:i:c:p:395-407
    DOI: 10.1016/j.worlddev.2015.09.001
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    Cited by:

    1. Auriol, Emmanuelle & Søreide, Tina, 2017. "An economic analysis of debarment," International Review of Law and Economics, Elsevier, vol. 50(C), pages 36-49.
    2. Emmanuelle Auriol & Stéphane Straub, 2011. "Privatization of Rent-Generating Industries and Corruption," Chapters,in: International Handbook on the Economics of Corruption, Volume Two, chapter 7 Edward Elgar Publishing.
    3. Antonio Estache & Renaud Foucart, 2016. "Corruption and Incompetence in Public Procurement," Working Papers ECARES ECARES 2016-05, ULB -- Universite Libre de Bruxelles.
    4. Hoekman, Bernard & Sanfilippo, Marco, 2018. "Firm performance and participation in public procurement: Evidence from Sub-Saharan Africa," CEPR Discussion Papers 12752, C.E.P.R. Discussion Papers.
    5. Straub, Stéphane, 2014. "Political Firms, Public Procurement, and the Democratization Process," TSE Working Papers 14-461, Toulouse School of Economics (TSE).
    6. Barbosa, Klenio & Straub, Stéphane, 2017. "The Value of Revolving Doors in Public Procurement," TSE Working Papers 17-873, Toulouse School of Economics (TSE).
    7. repec:eee:juipol:v:48:y:2017:i:c:p:184-194 is not listed on IDEAS
    8. 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.
    9. 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.
    10. Kochanova,Anna & Hasnain,Zahid & Larson,Bradley Robert, 2016. "Does e-government improve government capacity ? evidence from tax administration and public procurement," Policy Research Working Paper Series 7657, The World Bank.
    11. Bernard Hoekman, 2015. "International Cooperation on Public Procurement Regulation," RSCAS Working Papers 2015/88, European University Institute.
    12. repec:eee:pubeco:v:157:y:2018:i:c:p:95-106 is not listed on IDEAS

    More about this item

    Keywords

    procurement; corruption; rent-seeking; development;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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