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Public expenditure and international specialisation

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  • Brülhart, Marius
  • Trionfetti, Federico

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, lokale 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 relativ 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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Bibliographic Info

Paper provided by Hamburg Institute of International Economics (HWWA) in its series HWWA Discussion Papers with number 141.

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Date of creation: 2001
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Handle: RePEc:zbw:hwwadp:26299

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Keywords: public expenditure; international specialisation; economic geography; European Union; input-output analysis;

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References

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  1. 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.
  2. 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.
  3. Trionfetti, Federico, 2001. "Public Procurement, Market Integration, and Income Inequalities," Review of International Economics, Wiley Blackwell, vol. 9(1), pages 29-41, February.
  4. Vagstad, Steinar, 1995. "Promoting fair competition in public procurement," Journal of Public Economics, Elsevier, vol. 58(2), pages 283-307, October.
  5. Branco, Fernando, 1994. "Favoring domestic firms in procurement contracts," Journal of International Economics, Elsevier, vol. 37(1-2), pages 65-80, August.
  6. Federico Trionfetti, 2000. "Discriminatory Public Procurement and International Trade," The World Economy, Wiley Blackwell, vol. 23(1), pages 57-76, 01.
  7. Krugman, Paul & Venables, Anthony J., 1995. "Globalization and the Inequality of Nations," Working Paper Series 430, Research Institute of Industrial Economics.
  8. repec:fth:iniesr:430 is not listed on IDEAS
  9. Donald R. Davis & David E. Weinstein, 1998. "Market Access, Economic Geography and Comparative Advantage: An Empirical Assessment," Harvard Institute of Economic Research Working Papers 1850, Harvard - Institute of Economic Research.
  10. McAfee, R. Preston & McMillan, John, 1989. "Government procurement and international trade," Journal of International Economics, Elsevier, vol. 26(3-4), pages 291-308, May.
  11. Miyagiwa, Kaz, 1991. "Oligopoly and Discriminatory Government Procurement Policy," American Economic Review, American Economic Association, vol. 81(5), pages 1320-28, December.
  12. Weichenrieder, Alfons J., 1999. "Public procurement in the presence of capital taxation," ZEW Discussion Papers 99-41, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  13. 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.
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Citations

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Cited by:
  1. Federico Trionfetti, 2012. "Public Debt and Economic Geography," Working Papers halshs-00793388, HAL.
  2. Ulrike Stierle-von Schütz, 2005. "Fiscal Design and the Location of Economic Activity," ERSA conference papers ersa05p539, European Regional Science Association.
  3. Sanguinetti, Pablo & Traistaru, Iulia & Volpe Martincus, Christian, 2004. "Economic integration and location of manufacturing activities: Evidence from MERCOSUR," ZEI Working Papers B 11-2004, ZEI - Center for European Integration Studies, University of Bonn.
  4. Maria del Carmen Garcia-Alonso & Paul Levine, 2005. "Strategic Procurement, Openness and Market Structure," Studies in Economics 0503, Department of Economics, University of Kent.
  5. Marius BRÜLHART & Federico TRIONFETTI, 2001. "A Test of Trade Theories when Expenditure is Home Biased," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 01.11, Université de Lausanne, Faculté des HEC, DEEP.
  6. Jürgen von Hagen, 2007. "Institutionelle Gestaltung föderaler Systeme: Theorie und Empirie," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 8(2), pages 109-109, 03.
  7. Federica Calidoni, 2004. "Aggregate and Disaggregate Analysis of the Effects of Government Expenditure on Growth," Dundee Discussion Papers in Economics 160, Economic Studies, University of Dundee.
  8. Cornelius Bähr & Ulrike Stierle-von Schütz & Matthias Wrede, 2007. "Dezentralisierung in den EU-Staaten und räumliche Verteilung wirtschaftlicher Aktivitäten," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 8(2), pages 110-129, 03.

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