Careers, Connections and Corruption Risks in Europe

Abstract

Why do officials in some countries favor entrenched contractors while others assign public contracts more impartially? According to the research, such variation responds to differences in political institutions, economic development and historical preconditions. This paper instead emphasizes the interplay between politics and bureaucracy. It suggests that corruption risks are minimized when the two groups involved in decision-making on public contracts — politicians and bureaucrats — have known different interests. This is institutionalized when politicians are accountable to the electorate, while bureaucrats are accountable to their peers, and not to politicians. We test this hypothesis with a novel experience-based measure of career incentives in the public sector — utilizing a survey with over 85,000 individuals 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 corruption risks significantly lower where bureaucrats' careers do not depend on political connections.

Keywords: corruption, bureaucracy, Europe

JEL Classification: D72, D73, H57