controlling corruption in development aid: new evidence...
TRANSCRIPT
Controlling Corruption in Development Aid:
New Evidence from Contract-Level Data
Australasian Aid Conference | 14 February 2018
© A
lexandra
Jonnaert
/ M
erc
y C
orp
s
Elizabeth Dávid-Barrett
Mihály Fazekas
Olli Hellmann
*Lili Márk
Ciara McCorley
Corruption, aid and procurement
- Inconclusive findings in Corruption-Aid :
- aid fuels corruption
- aid helps to curb corruption
- no significant correlation
- About 50% of aid is spent via local procurement
- Further questions:
- What about other incentives? – e.g. time horizons
- What about interactive effects between donor regulations
and recipient country context?
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Our project
- See project details here
- 500K+ aid-funded contracts
- 100+ countries
- Longitudinal data: 1991-2016 in some cases
- Donors: World Bank, Inter-American Development Bank, EuropeAid (procurement is local)
Research questions:
I. How are corruption patterns affected by changes in donor rules?
II. How do corruption patterns vary according to political context?
III. Do donor efforts to control corruption work better in some contexts than others?
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Corruption risk indicators
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World Bank Regulatory change in 2003
- Most significant changes:
- Donor oversight: e.g. intro of procurement plans, extension
of audits for bidder (not just winners)
increase costs of corruption
- Tender advertisement: wider use of electronic
advertisement
increase competition
- E-procurement
lowers bidding costs
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Definition of context
- Political party system institutionalisation (PSI)- To capture time horizon of elites
- e.g. how many parties have permanent organisations / local party branches, publicly available party platforms, typically members of the party vote together
- Source: V-Dem database
- State capacity (SC)
– 3 core dimensions• Extractive capacity: collect money, raising revenues
• Coercive capacity: maintain order, protect borders
• Administrative capacity: develop policies, provide public goods
- Source: Hanson and Sigman (2013)
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Our hypotheses
H1: The 2003 reform of World Bank procurement rules decreases corruption risks in aid-funded public procurement.
H2: Higher PSI (time horizon) is associated with lower corruption risks in aid-funded public procurement.
H3: Higher state capacity is associated with lower corruption risks in aid-funded public procurement.
H4: The 2003 reform of the World Bank procurement rules decreases corruption risks most where PSI (time horizon) is high.
H5: The 2003 reform of World Bank procurement rules decreases corruption risks least where state capacity is high.
risks
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Our hypotheses
H1: The 2003 reform of World Bank procurement rules decreases corruption risks in aid-funded public procurement.
H2: Higher PSI (time horizon) is associated with lowercorruption risks in aid-funded public procurement.
H3: Higher state capacity is associated with lowercorruption risks in aid-funded public procurement.
H4: The 2003 reform of the World Bank procurement rules decreases corruption risks most where PSI (time horizon) is high.
H5: The 2003 reform of World Bank procurement rules decreases corruption risks least where state capacity is high.
recipient
country context
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Our hypotheses
H1: The 2003 reform of World Bank procurement rules decreases corruption risks in aid-funded public procurement.
H2: Higher PSI (time horizon) is associated with lower corruption risks in aid-funded public procurement.
H3: Higher state capacity is associated with lower corruption risks in aid-funded public procurement.
H4: The 2003 reform of the World Bank procurement rules decreases corruption risks most where PSI (time horizon) is high.
H5: The 2003 reform of World Bank procurement rules decreases corruption risks least where state capacity is high.
interactive
effects
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Our methods of analysis
2000 2001 2002 2003 2004 2005 2006 2007 2008 Total
Control 1,307 2,434 3,572 4,062 4,060 3,432 2,160 1,505 690 23,222
Treated 0 0 0 0 319 1,133 1,496 1,601 1,047 5,596
Total 1,307 2,434 3,572 4,062 4,379 4,565 3,656 3,106 1,737 28,818
Number of contracts awarded in the treated and control groups
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Our findings: donor regulations work
H1
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Our findings: the context matters
H2
H3
H4
H5
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Our findings: the context matters
.15
.2.2
5.3
.35
Pre
dic
ted
sin
gle
bid
ratio
-1.5 -1.25 -1 -.75 -.5 -.25 0 .25 .5State capacity index
control treatment
Predictive Margins
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Conclusion
• We built a novel contract-level procurement
database of aid spending
• Analysing the impacts of WB reform, we find that
– it decreased corruption risks (4% less single bidding)
– context matters: higher PSI / state capacity – lower
corruption risks
– context matters: higher impact for lower state capacity, PSI
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Thank you for you attention!
Lili Márk
PhD Student in Economics
Central European University
(former Government Transparency Institue)
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Our dependent variable: single bidding
Contracts above 50K USD; countries with at least 500 contracts, weigthed
by contract value, lin.corr.coeff.= -0.28
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No manipulation around threshold
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No manipulation around threshold
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Share of prior-reviewed contracts
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