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Scaling behavior of public procurement activity.

António Curado1, Bruno Damásio1,2, Sara Encarnação3,4

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Public procurement spending shows economies of scale with population growth. Analyzing deviations from this scaling law helps characterize municipal spending on public works, goods, and services.

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Area of Science:

  • Economics
  • Public Policy
  • Urban Studies

Background:

  • Public procurement constitutes a major part of OECD countries' expenditures.
  • Existing methodologies are insufficient for comparing procurement activities across institutions of varying scales.
  • This gap poses challenges for policymakers and academics seeking to understand public spending efficiency.

Purpose of the Study:

  • To apply urban scaling laws to analyze public procurement activity in Portuguese municipalities.
  • To investigate economies of scale in public procurement expenditure relative to population size.
  • To develop a framework for comparative analysis of local public expenditure.

Main Methods:

  • Utilized methods from urban scaling laws literature.
  • Analyzed public procurement data from 278 Portuguese municipalities (2011-2018).
  • Examined scaling relationships between procurement expenditure and population size, including contract categories (Works, Goods, Services).

Main Results:

  • Public procurement expenditure demonstrates a sublinear scaling with population size, indicating economies of scale.
  • Scale-Adjusted Indicators revealed distinct procurement profiles for municipalities based on contract categories.
  • Identified a richer, localized characterization of municipal procurement activities.

Conclusions:

  • Urban scaling laws provide a quantitative framework for studying local public expenditure.
  • The findings offer policymakers a foundation for more appropriate comparative analysis of public procurement.
  • This approach enhances the understanding of efficiency and local characteristics in public spending.