Political donations, public procurement and government efficiency

Vítězslav Titl, Kristof De Witte and Benny Geys

World Development, 2021, vol. 148, issue C

Abstract: Public procurement markets are worth 10–15% of global GDP. Recent empirical evidence suggests that firms’ political donations can induce important distortions in the allocation of public procurement contracts. In this article, we employ a non-parametric efficiency model to study the implications of such distortions for the regional governments’ efficiency. Using a unique dataset covering the Czech regions over the 2007–2017 period, we find that the efficiency of public good provision is lower when a larger share of public procurement contracts is awarded to firms donating to the party in power (‘party donors’) – even when we account for quality differences in public goods provision. We link the dependence on politically connected firms to the institutional design of the procurement allocation process (i.e. the use of less restrictive and less open allocation procedures), which helps explaining the mechanics behind the observed decrease in efficiency.

Keywords: Political donations; Public procurement; Regional government efficiency; Non-parametric efficiency analysis (search for similar items in EconPapers)
JEL-codes: C23 D72 H57 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: Political donations, public procurement and government efficiency (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:148:y:2021:i:c:s0305750x21002813

DOI: 10.1016/j.worlddev.2021.105666

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