Procurement and Development Effectiveness - A Literature Review

Tuesday, 26 January 2010 16:49

Eurodad has identified public procurement policies and practices by developing country governments and aid agencies as a key area in which more progress is needed in order to improve the effectiveness of official development assistance. Public procurement accounts for up to 40 percent of GDP in some developing countries. Besides being an important share of these countries’ economies, procurement policies are an important instrument to achieve socioeconomic goals such as economic development, poverty eradication and social equity. Procurement policies are also an important policy tool in the hands of governments to boost the national socio-economic fabric as part of their development strategies to gradually reduce aid dependence.

In aid dependent countries in particular, a considerable share of public procurement is financed through Official Development Assistance (ODA) injected into national budgets as budget support. The use of developing countries’ own procurement systems was a donor commitment included under international agreements on aid effectiveness including the Paris Declaration and the Accra Agenda for Action. A second commitment was to untie aid to a maximum extent, aiming to increase the efficiency and development effectiveness of aid agencies’ own procurement.

For these reasons, Eurodad has chosen to focus on this area as it launches its new research project to inform civil society positions ahead of the upcoming High Level Forum that will take place in Seoul in 2011. The project mirrors the successful “Turning the Tables” report published ahead of the High Level Forum in Accra and which was very well received by government officials and civil society organisations. The research will comprise country case studies and a synthesis report whose findings will be used in Eurodad’s activities towards the Fourth High-Level Forum on Aid Effectiveness in 2011. This literature review is a part of this project. Its main purpose is to map and review the relevant literature on procurement as a development policy tool and to inform the case study work. But readers who are interested in the developmental and socioeconomic implications of procurement by aid agencies and recipient country governments might also find it a useful stand-alone source of information for their work.

The new emphasis on using country systems as a central part of the current aid effectiveness reform agenda has led to a bulk of new studies mainly produced by the World Bank and the OECD informing the positions of donor countries. Most of this literature sees procurement as a neutral act of purchase, and focuses on the quality of procurement systems in order to increase value for money and ensure that aid monies are spent on the intended purposes. For most developing country governments, however, procurement has always been considered as an economic policy tool with which they can promote industrial development by channelling public finances to their own countries’ infant industries.

Civil society organisations have traditionally focused on the use of public procurement as a means by which public authorities can promote socially and environmentally friendly policies. According to these views, governments are obliged to promote and protect social and gender equity, core labour standards, decent work and environmental sustainability when procuring works, supplies or services. In developing countries, the potential is huge since on average procurement accounts for 70% of public spending. But the developmental and socioeconomic implications have largely been neglected by recent analysis by the World Bank and the OECD. Eurodad’s work intends to fill at least a part of this gap.

Procurement and Development Effectiveness - A Literature Review : Kb

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