variables related to management information systems for public finance, tax administration, customs, procurement, and human resources, as well as digital identification schemes.

Our explanatory variables of interest are indicators showing when e-government systems were adopted by the central government of each country and the type of the functionality of the adopted systems. The e-filing implementation year refers to the year in which the country first introduced an e-filing system at the given level of functionality. Typically, this occurs after core tax administration systems are in place. Given that e-filing is a relatively new e-government technology, countries have only one iteration of an e-filing system at a given level of functionality. System upgrades that do not constitute an upgrade in system functionality are not recorded in the data set. E-filing functionality is assessed at three levels: 1) informational systems, which provide policy guidance and forms for download; 2) transactional systems, which allow taxes to be filed electronically; and 3) transactional systems with e-payment, which allow for electronic filing and payment of taxes. In the empirical analysis, we distinguish between transactional and transactional with e-payment functionalities. We do not have countries that implemented basic informational systems during our sample period.

The e-procurement implementation year refers to the year in which the most recent iteration of a country’s e-procurement system was introduced. E-procurement functionality is also assessed at three levels: 1) informational systems, which provide information about tenders and the results of bid evaluations; 2) transactional systems, which also allow tenders and supporting documents to be submitted and evaluated electronically; and 3) connected systems, in which the transactional system is integrated with other financial management information systems so that budgets, contractual commitments, and payments to vendors are automated. In our analysis we distinguish between informational and transactional systems. Four countries had adopted connected systems by 2014, but data on procurement competitiveness is not available for them, and they are excluded from our analysis.

Figure 1 shows the total number of e-filing and e-procurement systems adopted each year, by functionality. Overall, 125 countries implemented e-filing systems and 73 countries did not implement any system; 142 countries implemented e-procurement systems and 56 countries did not implement any system during the period 1990–2014.

To estimate the impact of e-government, we focus on tax compliance costs, public procurement competitiveness, and corruption measures at the country and firm levels. Tax compliance costs at the country level are the number of tax payments and the time required to prepare and pay taxes, which are available on an annual basis from the _Doing Business_ (DB) database.<sup>6</sup> These costs are estimated for a “typical” medium-sized manufacturing firm by in-country experts based on existing regulations and

> 6 One caution is that the number of tax payments might be somewhat endogenous with respect to e-filing implementation, as according to its definition “the number of payments takes into account electronic filing. Where full electronic filing and payment is allowed and it is used by the majority of medium-size businesses, the tax is counted as paid once a year even if filings and payments are more frequent.” (Source: <u>http://www.doingbusiness.org/methodology/paying-taxes). For completeness, we nevertheless consider this</u> variable in the analysis.

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