The World Bank Research Observer

Abstract

The World Trade Organization's voluntary rules on government procurement are a useful mechanism for ensuring that public procurement procedures are efficient. They also provide an opportunity to reduce the uncertainty of participants by increasing transparency and accountability. Yet most developing countries have chosen not to subject their procurement policies to international disciplines and multilateral surveillance. Their reasons may include an unfamiliarity with the government procurement agreement (GPA); a perception that the potential payoffs are small; a desire to discriminate in favor of domestic firms; or the successful opposition of groups that benefit from the current regimes. Although the economic rationales for abstaining from the GPA are not compelling, a quid pro quo for accession may be needed to overcome opposition by special interests. Developing country procurement markets are large enough that governments may be able to make accession to the GPA conditional on temporary exceptions to multilateral disciplines or on better access to export markets. All over the world government agencies purchase the goods and services necessary to provide the public with education, defense, utilities, infrastructure, public health, and so forth. The public procurement associated with these expenditures often represents a significant share of a country's gross domestic product. To maximize the use of scarce financial resources, governments have developed procedures and mechanisms to ensure that public entities procure these collective goods and services at least cost and in a fair and transparent manner. Some countries have addressed the issue of procurement efficiency head-on; South Africa, for example, wrote a section on procurement principles into its 1994 constitution requiring the government to pursue a fair, public, and competitive procurement process under the direction of independent and impartial tender boards that are obligated to record decisions and make them available to interested parties (Transparency International 1997).