Abstract
This paper identifies the main determinants of errors in the allocation of spending by the Colombian Government. Using information from the Electronic Public Procurement System (SECOP), the determinants of the probability of an addition to a contract are identified. The errors of the government can be interpreted as an approximation of their corruption. The average income and educational level of a colombian department are found to directly influence the probability of an addition. Using the estimation of the binary choice models, the forecast error of an addition is estimated, it is found that public and civil works contracts have more forecast error, forming an ideal mechanism for thefts and accumulation of bribes. Our results show that predicting an addition can be done with high certainty.
Highlights
It is generally accepted that public corruption implies a misallocation of state resources and a deterioration of the welfare of the members of a country (Dimant and Tosato, 2018)
Cotte (2015) studies the interactions between insecurity and corruption, it is found that insecurity and corruption have different trends, the departments with a higher level of corruption and insecurity show less economic growth
When we do not control for this variables an increase of one thousand homicides generates that the probability of additions increases 12.4%, historically in Colombia 500 people per year have been killed in each department, in 2009 there were about 400 thousand people killed in the country
Summary
It is generally accepted that public corruption implies a misallocation of state resources and a deterioration of the welfare of the members of a country (Dimant and Tosato, 2018). A corrupt government is less likely to promote activities that generate difficulties in stealing public resources, such as: spending on public education, infrastructure to protect the environment, subsidies for old age, among others, Mauro (1995). Dimant and Tosato (2018) perform a literature review on the main determinants and effects of corruption. They find the expected effects of the interdependence between corruption and: i) bureaucracy, ii) economic and press freedom, iii) poverty, iv) wages and v) the growth of the underground economy (see Tanzi 1998, Goel and Nelson 2010, Treisman 2007, Paldam, 2002 and Owusu et al (2019)).
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