An assessment of the waste effects of corruption on infrastructure provision

In this paper we investigate the association between the efficiency of infrastructure provision and the level of corruption, in the province in which the infrastructure takes place, employing a large data set on Italian public works contracts. We, first, estimate efficiency in public contracts execution using a smoothed DEA bootstrap procedure that ensures consistency of our estimates. Then, we evaluate the effects of corruption using a semi-parametric technique that produces a robust inference for an unknown serial correlation between efficiency scores. In order to test the robustness of our results, the parametric stochastic frontier approach has also been employed. The results from both nonparametric and parametric estimates show that greater corruption, in the area where the infrastructure provision is localised, is associated with lower efficiency in public contracts execution.