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

Mironov, Maxim; Zhuravskaya, Ekaterina

doi:10.1257/pol.20140188

Cited by 103 publications

(75 citation statements)

References 43 publications

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“…6 An alternative hypothesis is that the ease of the execution of corruption payments affects the distribution of grants. 7 Corruption effectively materializes in grant-related procurement contracts (e.g., Goldman et al, 2013;Mironov and Zhuravskaya, 2014), and it probably can happen more easily if the contracting entities are from the same political body. This hypothesis predicts that politically aligned municipalities get more grants than those in opposition, at least if the contractor is a public entity.…”

Section: Introductionmentioning

confidence: 99%

Political incentives and state subsidy allocation: Evidence from Hungarian municipalities

Muraközy

Telegdy

2016

European Economic Review

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. types are susceptible to political manipulation and how politicians achieve this goal. Using township fixed-effect estimators to attenuate the simultaneity bias between municipality characteristics and political affiliation, we find that townships with a mayor endorsed by the governing parties obtain 10 percent higher grant value per capita. This effect varies widely by grant attributes: it is of 16-19 percent when the applicant is a public entity or the project's purpose is construction so it is visible to voters and thus may bring about electoral benefits. Terms of use: Documents inFor private applications and non-construction grants, where electoral gains are likely to be limited, the estimated effect is zero. Decomposing the township alignment effect into grant application effects (application intensity and the average value of grant) and grant decision effects (grant success rate and proportion of grant value received) reveals that both margins play a role in the political manipulation of grant distribution. When analyzing the effect of grants on votes, we show that voters indeed reward construction and public projects.

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Section: Introductionmentioning

confidence: 99%

Political incentives and state subsidy allocation: Evidence from Hungarian municipalities

Muraközy

Telegdy

2016

European Economic Review

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“…Politicians can leverage these information asymmetries to divert public funds. Voters' limited knowledge of public budgets, as well as the scale of money involved in constructing new infrastructure, makes public procurement an area that is particularly susceptible to political corruption (Di Tella and Schargrodsky 2003;Lewis-Faupel et al 2016;Mironov and Zhuravskaya 2016).…”

Section: Politicians' Incentivesmentioning

confidence: 99%

Unprincipled Principals: Co‐opted Bureaucrats and Corruption in Ghana

Brierley

2020

American J Political Sci

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In theory, granting politicians tools to oversee bureaucrats can reduce administrative malfeasance. In contrast, I argue that the political control of bureaucrats can increase corruption when politicians need money to fund election campaigns and face limited institutional constraints. In such contexts, politicians can leverage their discretionary powers to incentivize bureaucrats to extract rents from the state on politicians' behalf. Using data from an original survey of bureaucrats (N = 864) across 80 randomly sampled local governments in Ghana, I show that bureaucrats are more likely to facilitate politicians' corrupt behavior when politicians are perceived to be empowered with higher levels of discretionary control. Using qualitative data and a list experiment to demonstrate the mechanism, I show that politicians enact corruption by threatening to transfer noncompliant officers. My findings provide new evidence on the sources of public administrative deficiencies in developing countries and qualify the presumption that greater political oversight improves governance.

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“…Implicit in all of this work is that political connections provide firms with access to power, which steps in to provide the firm with stronger guarantees and greater certainty about policies that decrease the uncertainty of investment. In return, firms also do favors for politicians and provide them rents (Mironov and Zhuravskaya, 2016;Frye, Reuter, and Szakonyi, 2014;Frye and Iwasaki, 2011). Thus, political connections can facilitate credible commitment by certain politicians to the firms they are linked to.…”

Section: Theorymentioning

confidence: 99%

“…-in exchange for benefits from state officials, thus decreasing the resources available for investment (Mironov and Zhuravskaya, 2016;Boas, Hidalgo, and Richardson, 2014;Frye, Reuter, and Szakonyi, 2014). Firms may also be less willing to invest if they can use their connections to distort the economy to enhance their profitability without need for additional effort (Slinko, Yakovlev, and Zhuravskaya, 2005;Hellman, 1998).…”

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confidence: 99%

Political Connections and Non-Traditional Investment: Evidence from Public-Private Partnerships in Vocational Education

Marques

2017

SSRN Journal

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How do political connections shape the propensity of firms to make investments in weakly institutionalized settings? Traditionally, absent ways to hold the state accountable, firms should withhold investment for fear of predation. An emerging body of work on the political economy of investment has highlighted the competitive advantages that direct political connections with officials can bring to firms in institutionally weak environments with low accountability. These advantages, particularly privileged protection of property rights, can decrease uncertainty and promote investment even absent traditional accountability mechanisms. This paper applies these insights to a particularly risky form of investment for firms: public-private partnerships (PPP) with the state to develop skill. Skill development investments are riskier than average, since they require firms to reveal trade secrets about their production, engage in long-term interactions, and can be poached by free-riding rival firms. This paper argues that these risks can be overcome by a strong state partner (i.e. PPP), albeit this creates new risks in weakly institutionalized environments if the lower-level officials responsible for implementing agreements cannot be held accountable for agreements and can shirk. This paper argues that political connections provide the means for states to create credible commitment, as they give firms access to power that can enable them to monitor lower-level officials, call attention to misbehavior, and thus punish deviations from PPP agreements. It outlines the ways in which various types of political connections state ownership, direct officeholding, employing former officials, via formal consultative organs , and acquaintanceship can enable firms to hold lower-level officials accountable and engender credible commitment. These arguments are then tested using data from an original survey of 690 firms in 12 Russian regions.

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

Cited by 103 publications

References 43 publications

Political incentives and state subsidy allocation: Evidence from Hungarian municipalities

Political incentives and state subsidy allocation: Evidence from Hungarian municipalities

Unprincipled Principals: Co‐opted Bureaucrats and Corruption in Ghana

Political Connections and Non-Traditional Investment: Evidence from Public-Private Partnerships in Vocational Education

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