Public Procurement in Law and Practice 1

We examine a new data set of laws and practices governing public procurement, as well as procurement outcomes, in 187 countries. We measure regulation as restrictions on discretion of the procuring agents. We find that laws and practices are highly correlated with each other across countries, 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.

[1]  O. Bandiera,et al.  The Allocation of Authority in Organizations: A Field Experiment with Bureaucrats , 2020, The Quarterly Journal of Economics.

[2]  M. Prem,et al.  Corruption and Firms , 2017, The Review of Economic Studies.

[3]  A. Galetovic,et al.  Renegotiations and Corruption in Infrastructure: The Odebrecht Case , 2019, SSRN Electronic Journal.

[4]  S. Mocetti,et al.  Discretion and Supplier Selection in Public Procurement , 2018, The Journal of Law, Economics, and Organization.

[5]  E. Iossa,et al.  Bureaucratic Competence and Procurement Outcomes , 2018, The Journal of Law, Economics, and Organization.

[6]  A. Banerjee,et al.  Tangible Information and Citizen Empowerment: Identification Cards and Food Subsidy Programs in Indonesia , 2017, Journal of Political Economy.

[7]  Giancarlo Spagnolo,et al.  The Effect of Discretion on Procurement Performance , 2015, Manag. Sci..

[8]  Jonas Hjort,et al.  Individuals and Organizations as Sources of State Effectiveness , 2017, American Economic Review.

[9]  Jacyr Pasternak,et al.  Corruption , 2006, Einstein.

[10]  F. Szűcs.  Discretion and Corruption in Public Procurement , 2017 .

[11]  G. Spagnolo,et al.  Past Performance and Procurement Outcomes , 2016 .

[12]  Timothy G. Conley,et al.  Detecting Bidders Groups in Collusive Auctions , 2016 .

[13]  J. Mashaw.  The Fear of Discretion in Government Procurement Procurement and Public Management : The Fear of Discretion and the Quality of Government Performance , 2016 .

[14]  Jörg L. Spenkuch,et al.  Natural Disasters, Moral Hazard, and Special Interests in Congress , 2019 .

[15]  Giuliana Palumbo,et al.  Renegotiation of Public Contracts: An Empirical Analysis , 2015 .

[16]  E. Zhuravskaya,et al.  Corruption in Procurement and the Political Cycle in Tunneling: Evidence from Financial Transactions Data , 2015 .

[17]  Jan Teorell,et al.  Quality of Government , 2021, The Oxford Handbook of the Quality of Government.

[18]  Simeon Djankov,et al.  Corruption and Firm Behavior: Evidence from African Ports , 2014 .

[19]  Francesco Decarolis,et al.  Awarding Price, Contract Performance, and Bids Screening: Evidence from Procurement Auctions † , 2014 .

[20]  A. Shleifer,et al.  Education, Complaints, and Accountability , 2013, The Journal of Law and Economics.

[21]  E. Miguel,et al.  The Value of Democracy: Evidence from Road Building in Kenya , 2013 .

[22]  Imran Rasul,et al.  Management of Bureaucrats and Public Service Delivery: Evidence from the Nigerian Civil Service , 2013 .

[23]  R. Gibbons,et al.  The Handbook of Organizational Economics , 2012 .

[24]  Stephen P. Ryan,et al.  Incentives Work: Getting Teachers to Come to School , 2012 .

[25]  Giancarlo Spagnolo,et al.  Reputation, Competition, and Entry in Procurement , 2012 .

[26]  Decio Coviello,et al.  Publicity requirements in public procurement: Evidence from a regression discontinuity design ☆ , 2012 .

[27]  R. Pande.  Can Informed Voters Enforce Better Governance? Experiments in Low-Income Democracies , 2011 .

[28]  Decio Coviello,et al.  Tenure in Office and Public Procurement , 2010 .

[29]  A. Shleifer,et al.  Disclosure by Politicians , 2009 .

[30]  Andrea Prat,et al.  Active and Passive Waste in Government Spending: Evidence from a Policy Experiment , 2008 .

[31]  O. Hart,et al.  Debt Enforcement around the World , 2006, Journal of Political Economy.

[32]  Sendhil Mullainathan,et al.  Obtaining a Driver's License in India: An Experimental Approach to Studying Corruption , 2007 .

[33]  E. Moretti,et al.  Does education improve citizenship? Evidence from the United States and the United Kingdom , 2004 .

[34]  R. Barro,et al.  Which Countries Have State Religions? , 2004 .

[35]  Mara Faccio,et al.  Politically Connected Firms , 2004 .

[36]  Andrew Mayo.  Measuring Human Capital , 2003 .

[37]  Søren L. Buhl,et al.  How common and how large are cost overruns in transport infrastructure projects? , 2003 .

[38]  Andrei Shleifer,et al.  The New Comparative Economics , 2003 .

[39]  R. Fisman.  Estimating the Value of Political Connections , 2001 .

[40]  R. Di Tella,et al.  The Role of Wages and Auditing During a Crackdown on Corruption in the City of Buenos Aires , 2001 .

[41]  Robert J. Barro,et al.  Education and Economic Growth , 2001 .

[42]  R. Barro.  Determinants of Democracy , 1999 .

[43]  J. Svensson.  Who Must Pay Bribes and How Much? Evidence from a Cross-Section of Firms , 1999 .

[44]  R. Stott,et al.  The World Bank , 2008, Annals of tropical medicine and parasitology.

[45]  O. Hart,et al.  The Proper Scope of Government: Theory and an Application to Prisons , 1996 .

[46]  R. Porter,et al.  Detection of Bid Rigging in Procurement Auctions , 1992, Journal of Political Economy.

[47]  O. Hart,et al.  Incomplete Contracts and Renegotiation , 1988 .

[48]  Edward C. Banfield,et al.  Corruption as a Feature of Governmental Organization , 1975, The Journal of Law and Economics.

[49]  G. Stigler.  The Theory of Economic Regulation , 2021, The Political Economy.

[50]  P. Craig.  Courts , 1932, EU Administrative Law.