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Procuring Low Growth: The Impact of Political Favoritism on Public Procurement and Firm Performance in Bulgaria

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dc.contributor.authorFazekas, Mihaly
dc.contributor.authorPoltoratskaya, Viktoriia
dc.contributor.authorSchiffbauer, Marc
dc.contributor.authorTóth, Bence
dc.date.accessioned2025-03-14T13:26:32Z
dc.date.available2025-03-14T13:26:32Z
dc.date.issued2025-03-14
dc.description.abstractThis paper assesses the impact of favoritism in public procurement on private sector productivity growth. To this end, it combines three novel microeconomic data sets: administrative data on firms, including more than 4 million firm-year observations and rich financial and ownership information; public procurement transaction data for 150,000 published contracts and their tenders; and a newly assembled data set on firms’ political connections, drawing on asset declarations, sanction lists, and offshore leaks. This comprehensive data set allows tracing the impact of favoritism in allocating government contracts to economic growth. The findings show that politically connected firms are 18 to 32 percent more likely to win public procurement contracts due to their preferential access to uncompetitive tenders. Public procurement results in higher subsequent productivity and employment growth only if it has been awarded through competitive tenders. Firms winning contracts through uncompetitive procedures have flat growth but higher profit margins. Consistent with these findings, the paper shows that firms that are awarded uncompetitive public procurement contracts obtain rents of 9 to 11 percent from overpaid contracts. The results suggest that aggregate annual total factor productivity growth would have been 8 percent higher in the absence of favoritism in public procurement.en
dc.identifierhttp://documents.worldbank.org/curated/en/099159303132512532
dc.identifier.doi10.1596/42949
dc.identifier.doihttps://doi.org/10.1596/42949
dc.identifier.urihttps://hdl.handle.net/10986/42949
dc.languageEnglish
dc.language.isoen_US
dc.publisherWashington, DC: World Bank
dc.relation.ispartofseriesPolicy Research Working Paper; 11085
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttps://creativecommons.org/licenses/by/3.0/igo/
dc.subjectCOMPETITION
dc.subjectPRODUCTIVITY
dc.subjectPOLITICAL CONNECTIONS
dc.subjectPUBLIC PROCUREMENT
dc.titleProcuring Low Growthen
dc.title.subtitleThe Impact of Political Favoritism on Public Procurement and Firm Performance in Bulgariaen
dc.typeWorking Paper
dspace.entity.typePublication
okr.date.disclosure2025-03-14
okr.date.doiregistration2025-04-14T11:51:29.357991Z
okr.date.lastmodified2025-03-13T20:06:36Zen
okr.doctypePolicy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/099159303132512532
okr.guid099159303132512532
okr.identifier.docmidIDU-f65e02a4-bb3e-4fa5-a59c-fee25bf913a1
okr.identifier.externaldocumentum40000672
okr.identifier.internaldocumentum40000672
okr.identifier.reportWPS11085
okr.import.id6867
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttps://documents.worldbank.org/curated/en/099159303132512532/pdf/IDU-f65e02a4-bb3e-4fa5-a59c-fee25bf913a1.pdfen
okr.region.administrativeEurope and Central Asia
okr.region.countryBulgaria
okr.sectorFY17 - Central Government (Central Agencies)
okr.sectorPublic Administration
okr.themeFY17 - Economic Growth and Planning,FY17 - Adaptation,FY17 - Fiscal Policy,FY17 - Business Enabling Environment,FY17 - Climate change,FY17 - Mitigation,FY17 - Investment and Business Climate
okr.themeFY17 - Economic Policy,FY17 - Private Sector Development,FY17 - Environment and Natural Resource Management
okr.topicIndustry::Industrial and Consumer Services and Products
okr.topicGovernance::Political Systems and Analysis
okr.topicGovernance::Politics and Government
okr.topicScience and Technology Development::Technology Innovation
okr.topicMacroeconomics and Economic Growth::Economic Growth
okr.unitETIDR - EFI-FCI-TIC-Global Dir.
relation.isAuthorOfPublication2b1fc672-8407-59a0-ac52-c1ddd8082fd8
relation.isAuthorOfPublication.latestForDiscovery2b1fc672-8407-59a0-ac52-c1ddd8082fd8
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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