DP11968 Individuals and Organizations as Sources of State Effectiveness

Author(s): Michael Best, Jonas Hjort, David Szakonyi
Publication Date: April 2017
Date Revised: October 2019
Keyword(s): bureaucrats, policy design, Procurement, public sector organizations, state capacity
JEL(s): H1, O1
Programme Areas: Public Economics, Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=11968

How important are bureaucrats for the productivity of the state? And to what extent do the tradeoffs between different policies depend on the implementing bureaucrats' effectiveness? Using data on 16million public procurement purchases in Russia during 2011â??2016, we show that over 40 percent of the variation in quality-adjusted prices paid-our measure of performance-is due to the individual bureaucrats and organizations that manage procurement processes. Such differences in effectiveness matter for policy design. To illustrate, we show that a common procurement policy-bid preferences for domestic suppliers-dramatically improves performance, but only when implemented by ineffective bureaucrats