How (in)efficient are governments? Evidence from import transactions data

Povzetek

We use granular customs data at the transaction level from five large developing countries (Colombia, India, Indonesia, Mexico, and Vietnam) to provide direct evidence of the extent to which governments deviate from a cost-minimizing behavior as importers. We compare the price government agencies and SOEs pay vis-a-vis private sector firms for the same product. Our main finding is that government agencies and SOEs systematically pay 46%-300% more for their imports of the same products compared to private firms. Accounting for the fact that governments buy in smaller quantities reduces the premium by more than half for most countries. In our most stringent specification—which controls for product, source country, supplier, and time—we estimate a persistent “government price premium” ranging from 1% to 19%, depending on the country. Overall, most of the government premium appears driven by quantity discounts and supplier selection. The remaining premium likely reflects price discrimination on the part of suppliers. If governments were able to procure at the same prices as private firms, governments could save substantial amounts.

Gostitelj na Ekonomski fakulteti je dr. Jan Grobovšek.

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