Trust, Institutions and Public Procurement Performance : Evidence from Transitional Economies

This paper studies the trust-based efficiency gains in public sector with focus on transitional economies. We conducted a survey of public buyers in Russia and Slovakia in 2020. The results show that the generalized trust is positively related to procurement efficiency, though this effect is persistent only in an open-entry environment for both countries. Moreover, we show that trust-based efficiency gains depend on the quality of formal and informal contract enforcement institutions – courts and negotiations – though the dependence is different in Russia and Slovakia. In Slovakia, the generalized trust is complementary to institutions, while in Russia the generalized trust acts as a substitute for formal institutions. We explain this discrepancy by different trajectories of institutional formation in the post-socialist period