Careers, Connections, and Corruption Risks: Investigating the Impact of Bureaucratic Meritocracy on Public Procurement Processes

Abstract

Why do officials in some countries favor entrenched contractors while others assign public contracts more impartially? This paper emphasizes the important interplay between politics and bureaucracy. It suggests that corruption risks are lower when bureaucrats’ careers do not depend on political connections, but on their peers. We test this hypothesis with a novel measure of career incentives in the public sector—utilizing a survey with over 18,000 public sector employees in 212 European regions—and a new objective corruption risk measure including over 1.4 million procurement contracts. Both show a remarkable sub-national variation across Europe. The study finds that corruption risks are indeed significantly lower where bureaucrats’ career incentives exclusively follow professional criteria. In substantial terms, moving EU regions so that bureaucrats’ merit and effort would matter as much as in, for example, Baden-Wüttemberg (90th percentile) could lead to a 13 to 20 billion Euro savings per year.