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Government procurement: market access, transparency, and multilateral trade rules

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  • Evenett, Simon J.
  • Hoekman, Bernard M.

Abstract

The authors examine the effects on national welfare and market access of two public procurement practices-discrimination against foreign suppliers of goods and services and nontransparency of the procedures used to allocate government contracts to firms. Both types of policies have become prominent in international trade negotiations, including the Doha Round of the World Trade Organization (WTO) trade talks. Traditionally, the focus of international trade agreements has been on market access. However, many developing countries have opposed the launch of negotiations to extend the principle of nondiscrimination to procurement. As a result, the current focus in the Doha Round is on an effort to launch discussions on agreeing to principles of transparency in procurement. While transparency will not constrain the ability of governments to discriminate in favor of domestic firms, it could nonetheless improve market access by reducing corruption. The authors assess and compare the impact of eliminating discrimination and fostering greater domestic competition in procurement markets and enhancing transparency in state contracting. Their analysis concludes that greater domestic competition on procurement markets and greater transparency will improve economic welfare. But there is no clear-cut effect on market access of ending discrimination or improving transparency. This mismatch between market access and welfare effects may account for the slower progress in negotiating procurement disciplines in trade agreements than for traditional border measures such as tariffs, given that market access is the driving force behind trade agreements.

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Bibliographic Info

Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 21 (2005)
Issue (Month): 1 (March)
Pages: 163-183

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Handle: RePEc:eee:poleco:v:21:y:2005:i:1:p:163-183

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Web page: http://www.elsevier.com/locate/inca/505544

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References

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  1. Federico Trionfetti, 2000. "Discriminatory Public Procurement and International Trade," The World Economy, Wiley Blackwell, vol. 23(1), pages 57-76, 01.
  2. Naegelen, Florence & Mougeot, Michel, 1998. "Discriminatory public procurement policy and cost reduction incentives," Journal of Public Economics, Elsevier, vol. 67(3), pages 349-367, March.
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  9. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, December.
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  17. Thomas G. McGuire & Michael H. Riordan, 1991. "Incomplete Information and Optimal Market Structure: Public Purchases from Private Providers," Papers 0010, Boston University - Industry Studies Programme.
  18. Arye L. Hillman & Ngo Van Long & Peter Moser, 1995. "Modelling Reciprocal Trade Liberalization: The Political-economy and National-welfare Perspectives," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 131(III), pages 503-515, September.
  19. Kim, In-Gyu, 1994. "Price-preference vs. tariff policies in government procurement auctions," Economics Letters, Elsevier, vol. 45(2), pages 217-222, June.
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Citations

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Cited by:
  1. Evenett, Simon J & Hoekman, Bernard, 2004. "International Cooperation and the Reform of Public Procurement Policies," CEPR Discussion Papers 4663, C.E.P.R. Discussion Papers.
  2. Rod Falvey & Annamaria La Chimia & Oliver Morrissey & Evious Zgovu, . "Competition Policy and Public Procurement in Developing Countries," Discussion Papers 08/07, University of Nottingham, CREDIT.
  3. Shingal, Anirudh, 2013. ""New" econometric evidence for the Baldwin-Richardson (1972)/Miyagiwa (1991) theoretical predictions in government procurement," MPRA Paper 49138, University Library of Munich, Germany.
  4. Ngo Van Long & Frank StŠhler, 2008. "A Contest Model of Liberalizing Government Procurements," Working Papers 0803, University of Otago, Department of Economics, revised Jan 2008.
  5. Bucciol, Alessandro & Chillemi, Ottorino & Palazzi, Giacomo, 2013. "Cost overrun and auction format in small size public works," European Journal of Political Economy, Elsevier, vol. 30(C), pages 35-42.
  6. Kirkpatrick, Colin & Raihan, Selim & Bleser, Adam & Prud'homme, Dan & Mayrand, Karel & Morin, Jean Frederic & Pollitt, Hector & Hinojosa, Leonith & Williams, Michael, 2011. "Trade sustainability impact assessment (SIA) on the comprehensive economic and trade agreement (CETA) between the EU and Canada: Final report," MPRA Paper 28812, University Library of Munich, Germany.
  7. Dimitri Mardas, 2010. "Stabilization and Association Agreements (SAAs), Europe Agreements, and Public Procurement," Atlantic Economic Journal, International Atlantic Economic Society, vol. 38(3), pages 331-343, September.

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