Corruption in Procurement and the Political Cycle in Tunneling: Evidence from Financial Transactions Data

Maxim Mironov and Ekaterina Zhuravskaya

American Economic Journal: Economic Policy, 2016, vol. 8, issue 2, 287-321

Abstract: We provide evidence of corruption in allocation of public procurement and assess its efficiency. Firms with procurement revenue increase tunneling around regional elections, whereas neither tunneling of firms without procurement revenue, nor legitimate business of firms with procurement exhibits a political cycle. Data are consistent with the corruption channel—cash is tunneled to politicians in exchange for procurement contracts—and inconsistent with alternative channels. Using the strength of correlation between procurement revenue and tunneling around elections as a proxy for local corruption, we reject the "efficient grease" hypothesis: in more corrupt localities, procurement contracts go to unproductive firms. (JEL D22, D72, H57, K42, P26, P31, P37)

JEL-codes: D22 D72 H57 K42 P26 P31 P37 (search for similar items in EconPapers)
Date: 2016
Note: DOI: 10.1257/pol.20140188
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Citations: View citations in EconPapers (73)

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Related works:
Working Paper: Corruption in Procurement and the Political Cycle in Tunneling: Evidence from Financial Transactions Data (2016)
Working Paper: Corruption in Procurement and the Political Cycle in Tunneling: Evidence from Financial Transactions Data (2016)
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