Page 20 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.75, # 1, 2018, pp. 16-31

public procurement has the potential to impact national economy substantially
(Choi, n.d.). In Korea, for example, public procurement is one of the most of
government sales, which approximately accounts for ten percent of the country’s
Gross Domestic Product (GDP). Thus, in essence, public procurement plays a
critical role in ensuring that the society is a better place.

Furthermore, Public procurement has many goals for the society. Law and economic
analysis of the Estonian public procurement act demonstrate that its primary
objective is to regulate and supervise how purchasing entities use taxpayers' money.
Moreover, public procurement law focuses on enhancing transparency during
provision of works, services, and goods. Additionally, this legislation aims at
ensuring that upcoming businesses enter the market and compete against the already
existing organizations operating in the long-run. In essence, without the
opportunities provided enhanced by the public procurement system, large firms
would overshadow most small businesses. Big companies have the capacity, skills,
and experience that small businesses do not have. Thus, they possess a competitive
advantage (Suttle, 2018). Additionally, public procurement law ensures that
organisational units have access to and acquire sufficient information regarding
purchases of goods and services (Raudla, n.d.). As a result, these corporate units can
judge the suitability and correctness of public purchases. Additionally, public
procurement ensures that Value for Money, efficient service delivery, and quality
are achieved in all procurement processes, that is, for the services and works
provided and the goods delivered (Public Procurement Best Practice Guide, 2007).
All these factors are made possible through ensuring that corruption and favouritism
are avoided during procurement and tendering.

Also, public procurement is essential for many reasons. Some of the main reasons
are as follows. To start with, public procurement ensures that organisational units
including companies, the government, and household avoid money wastage. Lack of
efficient procurement processes can lead to significant wastage of money for various
sectors of the economy including health, education, and construction (Krause, 2014).
Therefore, to save money, organizational units opt to use public procurement
systems. Besides ensuring that organisational units save money, public procurement
ensures that various organisational groups receive works, goods, and services in
time. For a fact, public procurement process enhances delivery of works, services,
and products because they are regulated and governed by a set of laws. More so,
public procurement plays a vital role in eliminating corruptions and boosting
transparency during the purchase of services, works, and products. Usually,
worldwide losses due to frauds in procurement processes add up to billions of

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