Abstract
This study empirically investigates the impact of public procurement regulation quality on the competition for tenders and the cost-effectiveness of awarded contracts, by employing the World Bank’s Benchmarking Public Procurement and EuroPAM Public Procurement quality scores. Using extensive data on public procurement in the European Economic Area, Switzerland, and Macedonia, the analysis in this paper shows that higher quality public procurement regulatory regimes are associated with higher levels of competition and cost-effectiveness. Improved regulation quality significantly increases the number of bidders and the probability that the procurement price is lower than the estimated cost.
Highlights
Effective public procurement (PP) is integral for productive use of public resources and economic growth
I analyze the effect of PP regulation quality on three PP outcomes: level of competition, procurement procedure and PP cost-effectiveness
This section empirically examines the effect of PP regulation quality on level of competition in European Union (EU) PP
Summary
Effective public procurement (PP) is integral for productive use of public resources and economic growth. Policymakers and researchers (Campos et al, 2007 and Knack et al 2017) promote improved PP regulation, empirical research about the effect of PP quality on PP outcomes is limited. The cross-country structure of the TED data set allows identification of the effect of PP regulation quality. I investigate the effect of four PP quality measures on the level of competition, selection of procurement method and cost-effectiveness in EU PP. These measures are bid preparation score, bid and contract management score, payment of suppliers score and PP overall index. This paper provides empirical evidence about the positive effect of improved PP regulations on PP outcomes
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