Political Connections and Public Procurement in Turkey

Abstract

Using a unique dataset of 17,937 high-value public work construction procurements made between 2004 and 2011 and 5945 firms that won the auctions of these state procurements, this chapter provides systematic evidence of favoritism in public procurement in Turkey. While the yearly total of high-value construction procurements has tripled in 8Â?years, the share of procurements that are made through less competitive procurement methods increased due to various legal amendments that increased state discretion in the public procurement contract award processes. The chapter shows how politically connected firms enjoyed high levels of government discretion and higher contract prices in public procurements compared with non-connected firms. The probability of a politically connected firm winning a procurement contract increases, among other things, when less competitive award procedures are used. Procurements that are conducted through less competitive methods cost more to the public. The use of public procurement for rent creation and distribution was extensive particularly for projects that cost more than TL 10 million and for projects initiated by the public housing agency (TOKİ).