Lights on the Shadows of Public Procurement: Transparency in government contracting as an antidote to corruption?

Report by Agnes Czibik, Mihaly Fazekas, Monika Bauhr and  Jenny de Fine Licht for Digiwhist: “Transparency is widely promoted as an essential condition for good governance, and as an effective tool against public sector corruption more specifically. Although the empirical evidence on the impact of transparency on corruption is growing, empirical evidence remains mixed. Recent critique holds that a main reason for the lack of robust empirical evidence is that both conceptualization and available measures of government transparency are broad and sometimes imprecise, and that the concepts of transparency are often far removed from the type of information that is relevant to assess government performance.

This paper seeks to develop a more precise conceptualization and measure of transparency that is actionable for the stakeholders of government decisions. The paper uses newly collected data of more than 4 million public procurement contracts between 2006-2015 to investigate the impact of transparency on high-level corruption risks in public procurement across Europe. We find a strong negative impact of overall tender transparency on corruption risks. The results also show that exante transparency, i.e. transparency before the contract is awarded, has a stronger effect on corruption risks than ex-post transparency, i.e. the availability of information after the contract has been awarded to a bidder. This suggest that internal transparency, or transparency first and foremost directed to provide information to the parties involved in the bidding process rather than to outside observers, is the main condition for wider public accountability to emerge. However, the effectiveness of this type of transparency is strengthened in contexts where there is also a wider societal demand for reduced corruption. In sum, our results suggest that transparency can reduce corruption risks if the information is both relevant to inside observers and actionable….(More)”.