Does the WTO Government Procurement Agreement Deliver What It Promises?

Abstract

We examine the impact of the World Trade Organization (WTO) Government Procurement Agreement (GPA) on government procurement practices in the European Union (EU). We analyse empirically whether the WTO GPA is effective in promoting non-discriminatory, open, transparent, competitive, and cost-effective government procurement. To study this question, we use a unique data set recently released by the EU, covering more than three million tenders conducted in the European Economic Area, Switzerland, and Macedonia during the years 2006-2016. We find that the WTO GPA promotes competition by increasing the probability of awarding a contract to a foreign firm. In addition, the WTO GPA significantly lowers corruption risk by decreasing the number of contracts with single bidders, and by decreasing total number of wins by a single firm. Finally, the WTO GPA fosters cost-effective public procurement by lowering the probability that the procurement price is higher than estimated cost.