Elections and Corruption: Incentives to Steal or Incentives to Invest?

Abstract

By now, most political systems around the world hold regular multiparty elections of different quality and type. However, we know relatively little about the effect of elections on corruption, especially in high-discretion, public procurement contracts implementing development aid. To address this gap in the literature, we employ unmatched comparisons and matching estimators to analyze a global government contracting dataset that provides an objective proxy for corruption: the incidence of single bidding in competitive markets. We find that, all things being equal, corruption risks increase in the immediate pre-election period: single bidding is higher by 1.3–6.1% points. We demonstrate that the corruption-enhancing effect of elections is stronger under conditions of (i) high electoral competitiveness, (ii) medium-level party institutionalization, and (iii) “localized collective goods” clientelism.