Political donations, public procurement and government efficiency

Public procurement markets are worth 10–15% of global GDP. Recent empirical evidence suggests that firms’ political donations can induce important distortions in the allocation public contracts. In this article, we employ a non-parametric efficiency model to study implications such for regional governments’ efficiency. Using unique dataset covering Czech regions over 2007–2017 period, find good provision is lower when larger share contracts awarded firms donating party power (‘party donors’) – even account quality differences goods provision. We link dependence on politically connected institutional design process (i.e. use less restrictive and open procedures), which helps explaining mechanics behind observed decrease