Assessing Vulnerabilities to Corruption in Public Procurement and Their Price Impact

31 Pages Posted: 27 Jun 2022

See all articles by Aly Abdou

Aly Abdou

Government Transparency Institute

Olivier Basdevant

International Monetary Fund (IMF) - IMF Institute; Government of New Zealand - Department of Economics

Elizabeth Dávid-Barrett

University of Sussex

Mihaly Fazekas

Central European University (CEU); Government Transparency Institute

Date Written: May 2022

Abstract

Public procurement can be highly vulnerable to corruption. This paper outlines a methodology and results in assessing corruption risks in public procurement and their impact on relative prices, using large databases on government contracts and tenders. Our primary contribution is to analyze how price differential in public procurement contracts can be explained by corruption risk factor (aggregated in a synthetic corruption risk index). While there are intrinsic limitations to our study (price differentials can come from structural reasons, such as a limited number of potential suppliers) it still provides a guiding tool to assess where corruption risks would have the biggest budgetary impact. Such analysis helps inform mitigating policies owing to the granular data used.

Keywords: public procurement, corruption, corruption risks, procurement cost, price differential, corruption risk, price impact, procurement contract, data collection methodology, Global

JEL Classification: D73, H40, H57

Suggested Citation

Abdou, Aly and Basdevant, Olivier and David-Barrett, Elizabeth and Fazekas, Mihaly, Assessing Vulnerabilities to Corruption in Public Procurement and Their Price Impact (May 2022). IMF Working Paper No. 2022/094, Available at SSRN: https://ssrn.com/abstract=4147325

Aly Abdou (Contact Author)

Government Transparency Institute ( email )

Kecskemét
Hungary

Olivier Basdevant

International Monetary Fund (IMF) - IMF Institute ( email )

700 19 th Street NW
Washington, DC 20431
United States

Government of New Zealand - Department of Economics ( email )

2 The Terrace
P.O. Box 2498
Wellington
New Zealand

Elizabeth David-Barrett

University of Sussex ( email )

Sussex House
Falmer
Brighton, Sussex BNI 9RH
United Kingdom

Mihaly Fazekas

Central European University (CEU) ( email )

Quellenstrasse 51
Vienna, 1140
Austria

Government Transparency Institute ( email )

Kecskemét
Hungary

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