Political connections and public procurement in Turkey : evidence from construction work contracts

Abstract EN

Using a unique dataset of 17,937 high value public work construction procurements made between 2004 and 2011, this paper provides systematic evidence on favoritism in public procurement in Turkey.

While the yearly total of high value construction procurements has tripled in eight years, the share of procurements that are made through less competitive procurement methods increased due to various legal amendments that increased the use of less competitive procurement methods and hence state discretion in public procurement contract award processes.

We find that the politically connected firms enjoyed high levels of government discretion and higher contract prices in public procurements compared to the nonconnected other 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 towards public.

The use of public procurement for rent creation and distribution was extensive particularly for projects that cost more than TL 10 million, and the TOKİ projects.