The impact of electronic procurement of public works contracts in Indonesia and India

Data set Political Economy and State

Poorly functioning, and often corrupt, public procurement procedures are widely faulted for the low quality of infrastructure provision in developing countries. Can e-procurement 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.

The data sits under “Additional Materials” at the bottom of the page. It contains files for both India and Indonesia, as well as a useful Readme.pdf. The data contains source data for all analyses, in Excel and Stata. A master Stata do-file generates the paper’s tables and figures.