Corruption and instutitions: An analysis for the Colombian case

This paper identifies the main determinants of errors in the allocation of spending by the Colombian Government. Using information from the Electronic Public Procurement System (SECOP), the determinants of the probability of an addition to a contract are identified. The errors of the government can be interpreted as an approximation of their corruption. The average income and educational level of a colombian department are found to directly influence the probability of an addition. Using the estimation of the binary choice models, the forecast error of an addition is estimated, it is found that public and civil works contracts have more forecast error, forming an ideal mechanism for thefts and accumulation of bribes. Our results show that predicting an addition can be done with high certainty.