Poster #53 - Can E-Procurement Adoption Improve Infrastructure Outcomes? A Quasi-Experiment Analaysis

• In Event: Friday Poster Reception

Abstract

Government procurement of goods and services accounts for roughly 10 percent of global GDP (Lewis-Faupel et al. 2016) and represents a central channel through which governments deliver infrastructure and public services. At the same time, public procurement is widely recognized as one of the government functions most vulnerable to corruption due to high levels of discretion, information asymmetry, and financial stakes. Traditional procurement systems often lack effective oversight, transparency, and enforcement, undermining infrastructure access and service delivery (Briceño-Garmendia and Estache 2004). These weaknesses are commonly linked to limited competition, collusive contractor networks, and corruption among public officials (Kenny 2007). In response, e-procurement has emerged as a major digital governance reform aimed at improving transparency and efficiency in public procurement. While existing studies document positive effects in specific country contexts (Lewis-Faupel et al. 2016), there is limited cross-national evidence on whether and how e-procurement improves infrastructure outcomes.          

Drawing on principal-agent theory, transaction cost theory, and public choice theory, this study argues that e-procurement improves infrastructure outcomes through three interrelated mechanisms: reducing information costs, enhancing competition, and constraining corruption. By expanding access to tender information, e-procurement lowers entry barriers and broadens bidder participation. Increased transparency weakens collusive networks by facilitating entry of non-local firms, thereby intensifying competition. At the same time, digitalization limits discretionary authority in procurement processes and generates auditable records that strengthen external oversight. To test these theoretical arguments, the study employs a quasi-experimental design using cross-country panel data from 144 countries over the period 1990–2023. Exploiting the staggered adoption of e-procurement systems, we implement a difference-in-differences framework that combines the estimator developed by Callaway and Sant’Anna (2021) with two-way fixed effects models to account for heterogeneous treatment timing. Infrastructure outcomes are measured using indicators from the Quality of Government dataset (Teorell et al. 2016), including rural electricity access, mobile cellular subscriptions, and individual internet use, while data on e-procurement adoption are drawn from the World Bank dataset (Fazekas et al. 2024). Preliminary evidence suggests that e-procurement adoption contributes to improved access to and service provision of electricity and telecommunications infrastructure by increasing bidder participation and reducing concentration in contract awards, thereby enhancing competition and limiting opportunities for collusion.         

This study contributes to the literature of public management and corruption in three ways. First, it provides the first systematic cross-national evidence on the effects of e-procurement adoption on infrastructure-related outcomes. Second, it advances theory by identifying and empirically assessing key mechanisms—information access, competition, and administrative discretion—linking procurement reform to infrastructure provision. Third, it strengthens causal inference in the study of digital governance reforms by applying a staggered difference-in-differences design that addresses heterogeneous policy adoption across countries.

Author

• Tingzhong Huang, Fudan University
  Presenting Author