2121 Pennsylvannia Avenue, NW.
MSN F 3K-234
Washington, DC 20433
Institutional Affiliation: World Bank
NBER Working Papers and Publications
|May 2020||Public Procurement in Law and Practice|
with , , : w27188
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 consi...