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

Sean Lewis-Faupel, Yusuf Neggers, Benjamin Olken and Rohini Pande

No 20344, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: H57 O12 O53 (search for similar items in EconPapers)
Date: 2014-07
New Economics Papers: this item is included in nep-dev, nep-ict, nep-ppm, nep-sea and nep-ure
Note: DEV PE
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Published as Sean Lewis-Faupel & Yusuf Neggers & Benjamin A. Olken & Rohini Pande, 2016. "Can Electronic Procurement Improve Infrastructure Provision? Evidence from Public Works in India and Indonesia," American Economic Journal: Economic Policy, vol 8(3), pages 258-283.

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Journal Article: Can Electronic Procurement Improve Infrastructure Provision? Evidence from Public Works in India and Indonesia (2016)
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