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Public Expenditure and International Specialisation

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Author Info
Brulhart, Marius
Trionfetti, Federico

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Abstract

It is widely recognised that public-sector purchasers tend to discriminate in favour of domestic suppliers. We study the consequences of home-biased public procurement on international specialisation. In the theoretical analysis we find two effects. First, a country will specialise in the sector for which it has relatively large home-biased procurement (the "pull" effect). Second, home-biased procurement can counter agglomeration forces and thereby attenuate the overall degree of international specialisation (the "spread" effect). Our empirical analysis, conducted on input-output data for the European Union, yields supporting evidence for the pull effect and some support for the spread effect. Es ist hinlänglich bekannt, dass Käufer aus dem öffentlichen Sektor dazu neigen, locale Zulieferer gegenüber ausländischen Produzenten zu bevorzugen. Wir untersuchen die Folgen solch Heimmarkt-bevorzugender Beschaffungspraktiken für die internationale wirtschaftliche Spezialisierung. In unserer theoretischen Analyse stoßen wir auf zwei Effekte. Einerseits finden wir, dass sich Länder tendenziell auf Industrien spezialisieren, auf die ein relative großer Anteil ihrer öffentlichen Ausgaben entfällt. Wir nennen dies den Anziehungseffekt ("pull effect") öffentlicher Ausgaben. Andererseits zeigt unser Modell, dass ein international symmetrisch hoher Anteil der öffentlichen Hand an der Gesamtnachfrage industriellen Agglomerationskräften entgegenwirken kann und damit die Intensität der industriellen Spezialisierung einzelner Länder verringert. Wir nennen dies den Dispersionseffekt ("spread effect") öffentlicher Ausgaben. Im empirischen Teil ziehen wir Input-Output-Daten für EULänder heran. Sowohl der Anziehungseffekt als auch der Dispersionseffekt werden von den Daten bestätigt.

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Paper provided by Hamburg Institute of International Economics in its series Discussion Paper Series with number 26299.

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Date of creation: 2001
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Handle: RePEc:ags:hiiedp:26299

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Related research
Keywords: public expenditure; international specialisation; economic geography; European Union; input-output analysis; Public Economics; H5; F1; R3; R15;

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References listed on IDEAS
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  1. Ottaviano, Gianmarco I. P., 1999. "Integration, geography and the burden of history," Regional Science and Urban Economics, Elsevier, vol. 29(2), pages 245-256, March. [Downloadable!] (restricted)
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  2. McAfee, R. Preston & McMillan, John, 1989. "Government procurement and international trade," Journal of International Economics, Elsevier, vol. 26(3-4), pages 291-308, May. [Downloadable!] (restricted)
  3. Paul Krugman & Anthony J. Venables, 1995. "Globalization and the Inequality of Nations," NBER Working Papers 5098, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. Vagstad, Steinar, 1995. "Promoting fair competition in public procurement," Journal of Public Economics, Elsevier, vol. 58(2), pages 283-307, October. [Downloadable!] (restricted)
  5. Baldwin, Robert E., 1984. "Trade policies in developed countries," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 12, pages 571-619 Elsevier. [Downloadable!] (restricted)
  6. Donald R. Davis & David E. Weinstein, 1998. "Market Access, Economic Geography, and Comparative Advantage: An Empirical Assessment," NBER Working Papers 6787, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Federico Trionfetti, 2000. "Discriminatory Public Procurement and International Trade," The World Economy, Blackwell Publishing, vol. 23(1), pages 57-76, 01. [Downloadable!] (restricted)
  8. Weichenrieder, Alfons J., 2001. "Public procurement in the presence of capital taxation," Regional Science and Urban Economics, Elsevier, vol. 31(2-3), pages 339-353, April. [Downloadable!] (restricted)
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  9. Naegelen, Florence & Mougeot, Michel, 1998. "Discriminatory public procurement policy and cost reduction incentives," Journal of Public Economics, Elsevier, vol. 67(3), pages 349-367, March. [Downloadable!] (restricted)
  10. Miyagiwa, Kaz, 1991. "Oligopoly and Discriminatory Government Procurement Policy," American Economic Review, American Economic Association, vol. 81(5), pages 1320-28, December. [Downloadable!] (restricted)
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Cited by:
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  1. Maria Garcia-Alonso & Paul Levine, 2004. "Strategic Procurement, Openness and Market Structure," Department of Economics Discussion Papers 0904, Department of Economics, University of Surrey. [Downloadable!]
    Other versions:
  2. Marius Brülhart & Federico Trionfetti, 2009. "A test of trade theories when expenditure is home biased," Working Papers halshs-00366530_v1, HAL. [Downloadable!]
    Other versions:
  3. Ulrike Stierle-von Schütz, 2005. "Fiscal Design and the Location of Economic Activity," ERSA conference papers ersa05p539, European Regional Science Association. [Downloadable!]
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