Anti-corruption interventions in development aid: Is corruption reduced or merely displaced?
We analyse a dataset of World Bank-funded development aid tenders over two decades in >100 developing countries. With data points from multiple stages of the procurement process and key outcomes, we observe the heterogeneous effects of a 2003 anticorruption reform aimed at increasing oversight and opening up competition. Our tight matching estimations suggest that the reform is effective in a direct sense: it decreases corruption risks due to low competition (the share of single bidding falls from 22% to18%). But evasive tactics largely cancel out these positive direct effects: buyers switch to non-treated non-competitive procedure types (whose share increases from 7% to 10%) and exploit them more intensively. Overall, foreign companies lose out: their market share drops by 2 percentage points.
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