1. TABLE OF CONTENTS
Some interesting topics
Corruption and regulation:
1. Corruption in Procurement and Public Purchase
2. Infrastructure Privatization and Changes in Corruption Patterns: the
roots of public discontent
3. Decentralization and Corruption: evidence across countries
E m m a n u e l l e A u r i o l , C o r r u p t i o n i n P r o c u r e m e n t a n d P u b l i c P u r c h a s e ,
International Journal of Industrial Organization, Elsevier, Volume 24, issue 5, September 2006
D a v i d M a r t i m o r t a n d S t è p h a n S t r a u b ,
Infrastructure Privatization and Changes in Corruption Patterns: the roots of public discontent,
Journal of Development Economics ,Volume 90, Issue 1, September 2009
Raymond Fisman, Roberta Gatti, Decentralization and Corruption: evidence across countries, Columbia Business School
and Development Research Group, The World Bank, journal of Public Economic Volume 83, issue 3, March 2002
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2. TABLE OF CONTENTS
Corruption in Procurement and Public
Purchase
The purchase costs are defined broadly by the direct price paid by the buyer and the costs related to the procedure
chosen: open (competitive bidding procedure), when all potential suppliers compete with each other given the
terms of the contract, limited, when the buyer (or an official delegate) has the possibility to choose a group of
potential suppliers and negotiate with them the terms of the contract before the award.
In the case of open procedure fixed costs are higher because it is necessary that the buyer knows ex ante the
target market in order to better define the terms of the contract. The choice of the open procedure is often related
to the size of the market because a larger number of competitors is associated with greater savings in terms of
final purchase price.
Therefore, the role of the public official is to choose the most advantageous procedure based on information
acquired about the target market.
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3. TABLE OF CONTENTS
Corruption in Procurement and Public
Purchase
In this context there are two types of corruption that may involve the public official:
1. the capture when he is corrupted by a firm in order to award the contract strategically, choosing the limited
procedure rather than the open one dictated by the case;
2. the extortion, when a official takes a bribe from a firm with the threat of excluding it in the case of limited
procedure.
The key difference between the two is that the first case when perpetrated change the allocation of the contract in
favour of the briber, therefore the entire community will suffer the costs. In the second case, the exchange is only
at costs of the company that pays so as not to be excluded from the competition.
Thus, the author argues what has to be monitored and prevented through a system of incentives for public officials,
where possible, is the capture, whose costs, without any benefits, fall on taxpayers.
Since incentives are costly, it is desirable that large purchases are regulated at international level as they rarely
allow limited procedures and thus eliminate the risk of capture, but at the same time it is useful that the national
legal systems distinguish between these different types of corruption
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4. TABLE OF CONTENTS
Infrastructure Privatization and
Changes in Corruption Patterns:
the roots of public discontent
Public companies enjoying government transfers have little incentive to invest in cost reduction.
This disincentive is worsened when managers and public officials collude, allowing more aids at the expense of
taxpayers. Instead, the private company makes investments to achieve gains in efficiency because it does not
get aids, but may, as a result, corrupt public officials in order to obtain a less stringent regulation in terms of
quantity / price to the consumer.
The weight of corruption then moves from taxpayers to consumers. Higher aids to the public company result in
higher taxes for taxpayers; while a less stringent regulation for private companies means, with equal quality,
higher prices for consumers.
Checks on privatization in Latin America seem to confirm the results of the model.
Approximating the level of corruption perceived by citizens with the level of satisfaction related to the process of
privatization it is found that corruption does not decrease with privatization, but instead the subjects that most
suffer the consequences change.
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5. TABLE OF CONTENTS
Decentralization and Corruption:
evidence across countries
Some theoretical studies show that through decentralization (transfer of authority of decision-making from central
levels at local levels) increases the degree of responsibility of bureaucrats and politicians, driven to improve their
performance as directly involved with the “threat” of non re-election;
Others argue that decentralized systems attract bureaucrats of lower “quality” due to the lower acknowledgement
related to local rather than central positions.
It’s usefull look at the estimation of the relationship between degree of corruption, measured using the
International Country Risk Guide’s corruption index, and fiscal decentralization, measured as a share of public
expenditure at local level with respect to the amount of public expenditure at all levels of government, eliminating
the effect of several variables related to the level of corruption such as economic development of the country (in
terms of GDP), the extent of civil liberties, the degree of “economic openness”, the degree of ethnic fragmentation,
and, finally, the existence of a federal constitution in the country.
The effectiveness of decentralization to reduce corruption should be assessed by taking into account the way it is
implemented.
Thus, despite evidence that the decentralization process (in general) can play an important role in reducing the
level of corruption, it is necessary to conduct further research aimed at identifying, in particular, the “types ” of
decentralization that can more effectively be used for this purpose (for example by examining the effect that is
obtained if the revenues and expenses are decentralized, or just the expenditure decisions).
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TABLE OF CONTENTS
Some interesting topics
Thank You for your kindly attention