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Can Electronic Procurement Improve Infrastructure Provision? Evidence From Public Works in India and Indonesia
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Can Electronic Procurement Improve Infrastructure Provision? Evidence From Public Works in India and Indonesia

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  • 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.

Suggested Citation

  • Sean Lewis-Faupel & Yusuf Neggers & Benjamin A. Olken & Rohini Pande, 2014. "Can Electronic Procurement Improve Infrastructure Provision? Evidence From Public Works in India and Indonesia," NBER Working Papers 20344, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:20344
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    More about this item

    JEL classification:

    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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