Political connections and misallocation of procurement contracts: Evidence from Ecuador

• 成果类型: Article
• 署名作者: Brugues, Felipe; Brugues, Javier; Giambra, Samuele
• 署名单位: Instituto Tecnologico Autonomo de Mexico; Charles River Associates; Amazon.com
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2024.103296
• 发表日期: 2024
• 关键词: Allocative efficiency; political connections; public procurement; bureaucracy; Production function estimation

摘要

We use new administrative data from Ecuador to study the welfare effects of the misallocation of procurement contracts caused by political connections. We show that firms that form links with the bureaucracy through their shareholders experience an increased probability of being awarded a government contract. We develop a novel sufficient statistic - the average gap in revenue productivity and capital share of revenue - to measure the efficiency effects, in terms of input utilization, of political connections. Our framework allows for heterogeneity in quality, productivity, and non-constant marginal costs. We estimate political connections create welfare losses ranging from 2 to 6% of the procurement budget.