Reported Corruption vs. Experience of Corruption in Public Procurement Contracts

fondation pour les études et recherches sur le développement international LA FERDI EST UNE FONDATION RECONNUE D’UTILITÉ PUBLIQUE. ELLE MET EN ŒUVRE AVEC L’IDDRI L’INITIATIVE POUR LE DÉVELOPPEMENT ET LA GOUVERNANCE MONDIALE (IDGM). ELLE COORDONNE LE LABEX IDGM+ QUI L’ASSOCIE AU CERDI ET À L’IDDRI. CETTE PUBLICATION A BÉNÉFICIÉ D’UNE AIDE DE L’ÉTAT FRANÇAIS GÉRÉE PAR L’ANR AU TITRE DU PROGRAMME «INVESTISSEMENTS D’AVENIR» PORTANT LA RÉFÉRENCE «ANR-10-LABX-14-01». Reported Corruption vs. Experience of Corruption in Public Procurement Contracts* Bernard Gauthier | Frédéric Lesné Bernard Gauthier, Department of Applied Economics HEC Montreal, Canada. Email: [email protected] Frédéric Lesné, Centre d’Etudes et de Recherches sur le Developpement International (CERDI), Clermont-Auvergne University, France. Corresponding author. Email: [email protected] Abstract This paper examines the accuracy of estimates of corruption reported in business surveys by comparing reported experience of corruption in public procurement from Malagasy firms having won public contracts with a more objective measure of corruption in the sector using a red flag indicator of corruption risk. This red flag indicator of corruption identifies contracts that failed to comply (or circumvented) public procurement regulations. We find that about 68 percent of public contracts in Madagascar in 2013 and 2014 were awarded with a method not complying with the Public Procurement Code and classified according to our methodology at risk of corruption, with 85% of contracting firms having won at least one corruption-prone contract. Matching public procurement data in Madagascar with a firm-level survey in 2015 among firms awarded public contracts in 2013-2014, we find that experience of corruption has no influence on firms’ survey participation or propensity to answer questions about corruption. … /… JEL Classification : D21, C42, D73 Keywords : indicators, corruption, surveys, firms * Both authors gratefully acknowledge support from the French National Research Agency under program ANR-10-LABX-14-01. D e v e l o p m e n t P o l i c i e s W o r k i n g P a p e r 242 December 2018

Reported Corruption vs. Experience of Corruption in Public Procurement Contracts

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