Working Paper: NBER ID: w20344
Authors: Sean Lewis-Faupel; Yusuf Neggers; Benjamin A. Olken; Rohini Pande
Abstract: Poorly functioning, and often corrupt, public procurement procedures are widely faulted for the low quality of infrastructure provision in developing countries. Can electronic procurement (e-procurement), which reduces both the cost of acquiring tender information and personal interaction between bidders and procurement officials, ameliorate these problems? In this paper we develop a unique micro-dataset on public works procurement from two fast-growing economies, India and Indonesia, and use regional and time variation in the adoption of e-procurement across both countries to examine its impact. We find no evidence that e-procurement reduces prices paid by the government, but do find that it is associated with quality improvements. In India, where we observe an independent measure of construction quality, e-procurement improves the average road quality, and in Indonesia, e-procurement reduces delays in completion of public works projects. Bidding data suggests that an important channel of influence is selection -- regions with e-procurement have a broader distribution of winners, with (better) winning bidders more likely to come from outside the region where the work takes place. On net, the results suggest that e-procurement facilitates entry from higher quality contractors.
Keywords: e-procurement; public works; infrastructure; India; Indonesia
JEL Codes: H57; O12; O53
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| e-procurement (H57) | prices paid by the government for contracts (H57) |
| e-procurement (H57) | quality outcomes (I14) |
| e-procurement (H57) | project delays (H43) |
| e-procurement (H57) | broader distribution of winning bidders (D44) |