Where or Whom to Contract? An Empirical Study of Political Spillover Effects in Municipal Public Procurement Pedro J. Camões a,* , João Cerejeira b a CICP, University of Minho b NIPE, University of Minho and CIPES Abstract OECD and other international organizations have been very keen in recommending principles and institutional safeguards to curb corruption and to enhance transparency and integrity in public procurement. Despite the fact that Portugal is being considered a good example of e-procurement policies and practices among European countries, this is a very sensitive issue. Based on the the literature that provides evidence of a politicized administration of public procure- ment contracts, but limited to a specific municipality, this paper extends the analysis of political effects to other municipalities. Specifically, it asks if there is a relation between the political parties in power in a given municipality and the frequency of contracts awarded to a given firm? Our results show that for political reasons private firms are more likely to win a contract in a given municipality if they have already won contracts in other municipalities led by the same political party. We rely on a dataset (’base.gov’) with information on all bids by private firms and all contracts awarded by the 308 Portuguese municipalities in the period between 2008 and 2017. This includes three electoral cycles and more than 250,000. The empirical results - the political proximity - is robust to a number controls, including geographic proximity. This result has political and public governance implications. Keywords: Political parties, Public procurement, Favoured firms. ✩ Very preliminary draft, please do not cite or quote * Corresponding author: School of Economics and Management, Campus de Gualtar, 4710-057 Braga Email addresses: pedroc@eeg.uminho.pt (Pedro J. Camões), joao.cerejeira@eeg.uminho.pt (João Cerejeira) URL: https://www.eeg.uminho.pt/PT/people/569 (Pedro J. Camões), https://sites.google.com/site/joaocerejeira/ (João Cerejeira) 1 Acknowledgements: This work was carried out within the funding with reference n o ¯ PTDC/CPO- ADM/31171/2017, with the FCT (Fundação para a Ciência e a Tecnologia, I.P.) financial support through national funding and by the ERDF through the Operational Programme on "Competitiveness and Internationalization. Preprint submitted to MUNI Seminar May 22, 2019