The Role of Governors in Public Procurement

Abstract

This paper analyses the role of autocratic governors in public procurement performance on the sub-national level. In particular, we estimate the impact of autocratic governors’ tenure and their local ties on competition over public procurement and contract execution. To this purpose, we use the data on public contracts on road construction and repair in Russian regions from 2011-2014 and match it with the biographical information of governors, who administrate the auctions. We find the evidence that governors who are appointed by the president and do not have pre-governing local ties in the region (governors-outsiders) demonstrate predatory behaviour, compared with governors with local ties (governors-insiders). In particular, governors-outsiders restrict the competition at public procurement auctions significantly more than governors-insiders. Moreover, this restriction becomes worse with tenure in office by governors-outsiders, while governors-insiders do not exert this tenure effect. We argue that this restriction of competition cannot be explained by the intention of better contracts execution. Namely, the delays in execution and the probability of contract termination both increase with tenure for governors-outsiders and are quite stable for governors-insiders.