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Public Procurement in Law and Practice

Author

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  • Erica Bosio

    (World Bank)

  • Simeon Djankov

    (Peterson Institute for International Economics)

  • Edward Glaeser

    (Harvard University)

  • Andrei Shleifer

    (Harvard University)

Abstract

In this paper we examine a new dataset of laws and practices governing public procurement, as well as procurement outcomes, in 187 countries. We measure regulation as restrictions on the discretion of the procuring agents. We find that laws and practices are highly correlated with each other across countries, and better practices are correlated with better outcomes, but laws themselves are not correlated with outcomes. To shed light on this puzzle, we present a model of procurement in which both regulation and public sector capacity determine the efficiency of procurement. In the model, regulation is effective in countries with low public sector capacity, and detrimental in countries with high public sector capacity because it inhibits the socially optimal exercise of discretion. We find evidence broadly consistent with this prediction: Regulation of procurement improves outcomes but only in countries with low public sector capacity.

Suggested Citation

  • Erica Bosio & Simeon Djankov & Edward Glaeser & Andrei Shleifer, 2020. "Public Procurement in Law and Practice," Working Paper Series WP20-14, Peterson Institute for International Economics.
  • Handle: RePEc:iie:wpaper:wp20-14
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    2. Massimo Finocchiaro Castro & Calogero Guccio, 2021. "Does greater discretion improve the performance in the execution of public works? Evidence from the reform of discretionary thresholds in Italy," Working papers 108, Società Italiana di Economia Pubblica.
    3. Srhoj, Stjepan & Dragojević, Melko, 2021. "Public procurement and supplier job creation: Insights from auctions," MPRA Paper 110018, University Library of Munich, Germany.
    4. Federico Cingano & Filippo Palomba & Paolo Pinotti & Enrico Rettore, 2022. "Making Subsidies Work: Rules vs. Discretion," CESifo Working Paper Series 9560, CESifo.
    5. Mulabdic, Alen & Rotunno, Lorenzo, 2022. "Trade barriers in government procurement," European Economic Review, Elsevier, vol. 148(C).
    6. Gallego, Jorge & Rivero, Gonzalo & Martínez, Juan, 2021. "Preventing rather than punishing: An early warning model of malfeasance in public procurement," International Journal of Forecasting, Elsevier, vol. 37(1), pages 360-377.
    7. Tukiainen, Janne & Blesse, Sebastian & Bohne, Albrecht & Giuffrida, Leonardo M. & Jääskeläinen, Jan & Luukinen, Ari & Sieppi, Antti, 2021. "What are the priorities of bureaucrats? Evidence from conjoint experiments with procurement officials," ZEW Discussion Papers 21-033, ZEW - Leibniz Centre for European Economic Research.
    8. Gallego, Jorge & Prem, Mounu & Vargas, Juan F., 2020. "Corruption in the Times of Pandemia," SocArXiv js8by, Center for Open Science.
    9. Simone Wurster & Luana Ladu, 2022. "Triple-C: A Tridimensional Sustainability-Oriented Indicator for Assessing Product Circularity in Public Procurement," Sustainability, MDPI, vol. 14(21), pages 1-23, October.
    10. Julian di Giovanni & Manuel García-Santana & Priit Jeenas & Enrique Moral-Benito & Josep Pijoan-Mas, 2022. "Government Procurement and Access to Credit: Firm Dynamics and Aggregate Implications," Working Papers 1321, Barcelona School of Economics.
    11. Jonas Hjort & Vinayak Iyer & Golvine de Rochambeau, 2020. "Informational Barriers to Market Access: Experimental Evidence from Liberian Firms," NBER Working Papers 27662, National Bureau of Economic Research, Inc.
    12. Florence Kondylis & Mattea Stein, 2018. "The Speed of Justice," PSE Working Papers halshs-01735025, HAL.
    13. Rodrigo Carril, 2021. "Rules versus discretion in public procurement," Economics Working Papers 1765, Department of Economics and Business, Universitat Pompeu Fabra.
    14. Olga Balaeva & Yuliya Rodionova & Andrei A. Yakovlev & Andrey Tkachenko, 2021. "Public Procurement Efficiency As Perceived By Market Participants: The Case Of Russia," HSE Working papers WP BRP 29/PSP/2021, National Research University Higher School of Economics.
    15. Aristotelis Mavidis & Dimitris Folinas, 2022. "From Public E-Procurement 3.0 to E-Procurement 4.0; A Critical Literature Review," Sustainability, MDPI, vol. 14(18), pages 1-23, September.
    16. Adam, Isabelle & Fazekas, Mihály, 2021. "Are emerging technologies helping win the fight against corruption? A review of the state of evidence," Information Economics and Policy, Elsevier, vol. 57(C).
    17. Srhoj, Stjepan & Dragojević, Melko, 2021. "Public procurement and supplier job creation: Insights from auctions," MPRA Paper 110018, University Library of Munich, Germany.
    18. Detkova, Polina & Tkachenko, Andrey & Yakovlev, Andrei, 2021. "Gender heterogeneity of bureaucrats in attitude to corruption: Evidence from list experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 217-233.

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    More about this item

    Keywords

    Procurement; Law; Practice; Corruption;
    All these keywords.

    JEL classification:

    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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