Juan Felipe Riaño, Georgetown University

Paper: Pay-to-Play: Political Contributions and Long-term Distortions in Public Procurement

Abstract:  How do political donations influence the allocation of public procurement contracts? By linking the universe of public contractors and the mandatory reports of political donations by individuals and firms in Colombia, we demonstrate long-term distortions in the contract allocation process attributable to political donations: (1) Donors to political campaigns are more likely to be awarded public contracts, often of greater value, than non donors. (2) These donors tend to continue receiving public contracts even after losing direct political connections in subsequent election cycles, suggesting that their donations grant them extended access beyond immediate reciprocation. (3) Pointing to potential inefficiencies, contracts secured by donors exceed budgetary limits and tend to benefit riskier firms and inexperienced individuals. Building on these results, we conduct a Randomized Control Trial (RCT) in collaboration with investigative journalists, NGOs, and the Office of the Inspector General in Colombia to study how new mayors respond to deterrence messages about contract scrutiny for their donors.