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Trade barriers in government procurement

In: The Economics of Deep Trade Agreements

Author

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  • Mulabdic, Alen
  • Rotunno, Lorenzo

Abstract

This paper estimates trade barriers in government procurement, a market that accounts for 12 percent of world GDP. Using data from inter-country input-output tables in a gravity model, we find that home bias in government procurement is significantly higher than in trade between firms. However, this difference has decreased over time. Results also show that trade agreements with provisions on government procurement increase cross-border flows of services, whereas the effect on goods is small and not different from that in private markets. Provisions on transparency and procedural requirements are particularly instrumental in increasing cross-border government procurement.
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Suggested Citation

  • Mulabdic, Alen & Rotunno, Lorenzo, 2021. "Trade barriers in government procurement," CEPR Press Book Chapters, in: Ruta, Michele & Rocha, Nadia & Fernandes, Ana Margarida (ed.), The Economics of Deep Trade Agreements, edition 1, volume 1, chapter 11, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ebchap:p342-11
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    2. Ma, Jie & Chen, Xudong & Feng, Tong & Xu, Bing & Lu, Hongyuan & Guo, Quan, 2026. "The synergistic effects of demand-pull and supply-push policies on firm’s green innovation: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 89(C), pages 527-541.
    3. Heid, Benedikt & Stähler, Frank, 2024. "Structural gravity and the gains from trade under imperfect competition: Quantifying the effects of the European Single Market," Economic Modelling, Elsevier, vol. 131(C).
    4. Li, Jidong & Yuan, Cheng & Huang, Zhichun, 2025. "Invest to win: A study of "Local bias jumping" in China," Journal of Economic Behavior & Organization, Elsevier, vol. 236(C).
    5. Mulabdic, Alen & Nayyar, Gaurav, 2024. "Is the U.S. Friend-Shoring, Nearshoring, or Reshoring ? Evidence from Greenfield Investment Announcements," Policy Research Working Paper Series 11006, The World Bank.
    6. Hang, Jing & Zhan, Chaoqun, 2023. "Government procurement and resource misallocation: Evidence from China," Journal of Economic Behavior & Organization, Elsevier, vol. 216(C), pages 568-589.
    7. Matilde Bombardini & Andres Gonzalez-Lira, 2024. "The Increasing Cost of Buying American," CESifo Working Paper Series 11339, CESifo.
    8. Arozamena, Leandro & Ganuza, Juan-José & Weinschelbaum, Federico, 2023. "Renegotiation, discrimination and favoritism in symmetric procurement auctions," European Economic Review, Elsevier, vol. 159(C).
    9. Nannan Wang & Naixiao Cui & Junlin Hao & Yilin Chai, 2025. "The Role of Government Procurement in Sustainable Industry Development—The Trends and Research Agenda," Sustainability, MDPI, vol. 17(3), pages 1-23, February.

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement

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