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Public Procurement in Law and Practice

Author

Listed:
  • 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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    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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