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The Impact Of Public Procurement Law To The System Of Public Finance

Richard Pospisil (), Philipp Kunz () and Ondrej Krocil ()
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Richard Pospisil: IWE
Philipp Kunz: IWE
Ondrej Krocil: IWE

Global Economic Observer, 2019, vol. 7, issue 1

Abstract: - Public procurement law lays out the processes and procedures that public agencies, authorities, or departments should follow when procuring work or service using public funds. The law stipulates the threshold at which public entities should use public procurement instead of private procurement. Effectively, public agencies spend a considerable amount of government revenue on public services. However, controversy exists on the relationship between government spending and private sector investment. It also remains unclear as to whether public procurement law improves financial management. Thus, the purpose of this study is to determine the relationship between public procurement law and the crowding-out effect, taxes, and finance. The study relies on quantitative research design where data was collected from a sample of 130 participants who comprised of public procurement officials, private investors, and the public. Using a questionnaire, the findings showed that public procurement law increases government spending that in turn crowds out the private sector instead of crowding-in. The need to fund projects often compels government to increase taxes and in turn incur budget deficits due to lack of adequate finances. However, public procurement laws enhance financial planning and control.

Keywords: Public procurement law; crowding-out effect; financial management; taxation (search for similar items in EconPapers)
Date: 2019-06
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