Decio Coviello, Andrea Guglielmo, Clarissa Lotti, Giancarlo Spagnolo, 24 March 2022

Rules constraining bureaucratic discretion may limit the misuse of public funds but may also hinder government performance. Using Italian public works data, this column examines the prevalence and impact of procuring administrations manipulating the value of contracts. The authors find evidence suggesting that appointed administrations violate procedural rules to manipulate the value of contracts to retain discretion, and do it often enough to establish repeated interactions with less risky and better-performing suppliers so that, on average, procurement outcomes improve. They find no manipulation (and poorer procurement outcomes) for elected administrations, possibly due to stronger electoral discipline. 

Bernard Hoekman, Bedri Taş, 23 March 2022

Does international best practice public procurement regulation designed to maximise ‘value for money’ make it more difficult for smaller firms to win contracts? Using European procurement contract data, this column finds that higher quality regulation is associated with greater SME participation and higher probability that SMEs win contracts. Dividing contracts into smaller lots bolsters participation by SMEs, but only increases the probability of SMEs winning contracts for small-value lots (less than €25,000). The results suggest governments can enhance participation by SMEs in public procurement by improving the overall quality of procurement processes

Julian di Giovanni, Manuel García-Santana, Priit Jeenas, Enrique Moral-Benito, Josep Pijoan-Mas, 15 March 2022

Whether the allocation of public procurement contracts should target small firms is the subject of active policy debate. This column uses firm-level evidence and a macroeconomic model to show that granting public procurement contracts to small firms may help them accumulate assets and overcome their financial constraints in the long run, but the reallocation of projects may damage the saving incentives of larger firms. Specific details on how procurement policies are implemented at the firm level are crucial for understanding their macroeconomic impact.

Clarissa Lotti, Giancarlo Spagnolo, 02 March 2022

Monetary savings in public spending are one of the main arguments in favour of centralising procurement. In addition to direct savings from public administrations that buy through a central procurement agency, this column reports evidence of sizable indirect savings from public administrations that do not. These additional savings appear driven by informational externalities on less competent public buyers purchasing more complex goods. Accounting for indirect savings also increases the estimate of direct ones.

Oriana Bandiera, Erica Bosio, Giancarlo Spagnolo, 10 December 2021

A new CEPR ebook examines how public procurement, especially in an emergency, can cut red tape without increasing corruption and waste. Editors Erica Bosio, Giancarlo Spagnolo, and Oriana Bandiera explain what Covid-19 and other recent events have taught us.

Download the eBook:
Oriana Bandiera, Erica Bosio, Giancarlo Spagnolo Procurement in Focus: Rules, Discretion, and Emergencies, CEPR

Register for the online eBook launch on 15 December 14:00 GMT

Oriana Bandiera, Erica Bosio, Giancarlo Spagnolo, 30 November 2021

Covid-19 has served as a global case study for increased discretion in public procurement, with governments worldwide making rules more flexible to increase spending, reduce the damage, and save lives. A new CEPR eBook examines the tension between rules and discretion in public procurement and the steps that can be taken to improve procurement outcomes and mitigate the risk of corruption, collusion, abuse, and incompetence during crises. 

Bernard Hoekman, Anirudh Shingal, Varun Eknath, Viktoriya Ereshchenko, 25 November 2020

A prominent feature of the public policy response to COVID-19 has been the active use of trade policy instruments to enable access to essential supplies. This column finds the use of export restrictions targeting medical products to be strongly positively correlated with characteristics of prevailing public procurement regimes. Membership of trade agreements encompassing public procurement disciplines is associated with actions to facilitate trade in medical products. These findings suggest that future empirical assessments of trade policy drivers during the pandemic should consider the role of national public procurement systems and deep trade agreements.

Erica Bosio, Simeon Djankov, Edward Glaeser, Andrei Shleifer, 05 November 2020

Discretion in public procurement allows public officials to pursue socially and economically optimal procurement outcomes, but it also increases the possibility of corruption. This leads to a trade-off between allowing greater discretion and preventing corruption in public procurement. Using survey data on public procurement law and practices from 187 countries in 2019, this column investigates this trade-off. It finds that regulation is helpful when government efficiency is low, and harmful when it is high.

Erica Bosio, Marko Grujicic, Maksym Iavorskyi, 25 September 2020

A trade-off between quality and speed/cost in public procurement regulation is often seen as a challenge for legislators. This column analyses data from 187 economies and finds that this trade-off is not supported by the data. In fact, there is a positive correlation between quality and efficiency of public goods and services. The strong correlation suggests that certain features of governments produce good results across different services.

Lucian Cernat, Zornitsa Kutlina-Dimitrova, 16 April 2020

The Trump administration is reportedly dissatisfied with international public procurement and the benefits derived from the US membership of the WTO Government Procurement Agreement. This column argues that US estimates of a huge deficit with the EU in government procurement misrepresent the level of EU openness by only looking at the ‘tip of the procurement iceberg’. In these critical times, improving the factual basis and the data reporting processes to ensure that all GPA members are fully informed about the benefits of international public procurement openness is more important than ever. 

Vitezslav Titl, Benny Geys, 13 January 2019

Despite public concerns about the role and influence of big donors on politics, questions remain regarding the mechanisms behind political favouritism to donor corporations. Using 2006–2014 data on political donations and public procurement allocations in the Czech Republic, this column finds that firms that increase their donations to a political party see the value of their public procurement contracts rise in the following year. Contracting authorities appear to engage in different forms of strategic behaviour to favour corporate donors, who tend to face fewer competitors in more regulated and open procurement procedures.

Patrick Messerlin, Sébastien Miroudot, 07 September 2012

Public spending on large-scale projects is often a way of sneaking in protectionism through the back door and there are many cases of outright corruption. With the EU and US pushing hard for more open public procurement elsewhere in the world, this column asks just how open these markets are, particularly in the EU, which claims to have the most open market in the world.

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