Working Paper: NBER ID: w27188
Authors: Erica Bosio; Simeon Djankov; Edward L. Glaeser; Andrei Shleifer
Abstract: 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.
Keywords: Public Procurement; Corruption; Regulation; Public Sector Capacity
JEL Codes: D73; H11; H57; K42
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| procurement regulation (H57) | less corruption (H57) |
| laws (K49) | practices (L41) |
| practices (L41) | outcomes (P47) |
| laws (K49) | outcomes (P47) |
| procurement regulation improves outcomes in low capacity countries (H57) | outcomes (P47) |
| procurement regulation may harm outcomes in high capacity contexts (H57) | outcomes (P47) |
| laws (K49) | product quality in low human capital countries (J24) |
| laws (K49) | product quality in high human capital countries (J24) |
| laws positively associated with outcomes in low effectiveness countries (K00) | outcomes (P47) |
| laws negatively associated with outcomes in high effectiveness countries (K40) | outcomes (P47) |