Public procurement of goods and services has the potential to be a key driver of private sector development. Yet, a number of frictions in the relationships between governments and firms make achieving an efficient allocation of resources difficult. This project takes place in Uganda, where access to finance, corruption, and information are significant barriers to efficient public procurement. The primary focus of this project is centred around information frictions and it will provide the first comprehensive understanding of the market for government contracts in a low-income country, with an emphasis on understanding what are the main challenges to the participation of firms in the procurement process and to the competitiveness and efficiency of public procurement.
Emanuele Colonnelli et al. pursue two main objectives in this research. First, they will generate a uniquely rich micro-level dataset on a large set of high-growth firms that are in the position of doing business with the government. Second, through the design of a novel randomised controlled trial in collaboration with the government, they seek to causally identify the effect of alleviating a key economic friction in the interaction between government and firms - lack of information. Their intervention involves organising one-to-one meetings between procurement officials and various sets of firms to give both parties the opportunity to ask questions and obtain relevant information that they would be unable to obtain otherwise. Thanks to the researchers' collaboration with the Public Procurement and Disposal of Public Assets Authority, they have access to administrative data covering the universe of public procurement contracts and bids since 2010, which they will combine with newly digitised data on contract performance assessed from anti-corruption audits, and administrative and survey information on public entities and procurement officials.
The motivation for the project stems from the first-order policy interest in the role of public procurement for private sector development in low-income countries. The World Bank considers public procurement “an essential element of the poverty reduction focus," and emphasises how “transparent and accountable public procurement systems have the power to catalyze private sector development by opening access to business opportunities, improving the business and investment environment, enhancing competition, and promoting economic growth." This project is based on the goal of increasing transparency in public procurement, and developing capacity building initiatives that target the public and private sector simultaneously.
