Foreign market access in government procurement
Governments are known to prefer domestic over foreign suppliers in the award of procurement contracts despite cost and quality considerations. Literature exploring this “home-bias” in public purchases has exclusively focused on the microeconomic interplay between the tendering entity and the bidding firms. There are, however, other factors that influence governments’ buying decisions. Using self-assembled and hitherto unexplored data on government procurement submitted by Japan and Switzerland to the WTO, we study the determinants of foreign public procurement over the period 1990-2003. In doing so, we make a threefold contribution to this literature. One, we examine the effect of macroeconomic, political economy, procurement-specific and domestic policy factors that influence governments’ sourcing decisions. Two, we provide for an empirical test of Baldwin's (1970, 1984) "neutrality proposition" after controlling for other factors. Three, we test empirically whether the WTO's Agreement on Government Procurement (GPA) has been successful in increasing foreign market access. Our results suggest the importance of the magnitude of procurement demand and of the average contract size awarded to foreign suppliers in these governments' purchases from abroad. While the impacts of domestic firm competitiveness attributes, political budget cycles and Keynesian macroeconomic compulsions depend on the econometric specification used, we find that Baldwin's "neutrality proposition" does not hold for the public purchase pattern of either country. Moreover, membership of the GPA is not found to increase the value of foreign procurement in either country, though it seems to increase the import demand for contracts.
|Date of creation:||11 Aug 2011|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ravn, Morten O & Schmitt-Grohé, Stephanie & Uribe, Martín, 2007.
"Explaining the Effects of Government Spending Shocks on Consumption and the Real Exchange Rate,"
CEPR Discussion Papers
6541, C.E.P.R. Discussion Papers.
- Morten O. Ravn & Stephanie Schmitt-Grohé & Martín Uribe, 2007. "Explaining the Effects of Government Spending Shocks on Consumption and the Real Exchange Rate," NBER Working Papers 13328, National Bureau of Economic Research, Inc.
- Rogoff, Kenneth, 1990.
"Equilibrium Political Budget Cycles,"
American Economic Review,
American Economic Association, vol. 80(1), pages 21-36, March.
- Federico Trionfetti, 2000. "Discriminatory Public Procurement and International Trade," The World Economy, Wiley Blackwell, vol. 23(1), pages 57-76, 01.
- Roberto Burguet & Yeon-Koo Che, 2004. "Competitive Procurement with Corruption," RAND Journal of Economics, The RAND Corporation, vol. 35(1), pages 50-68, Spring.
- Baldwin, Richard & Harrigan, James, 2007.
"Zeros, Quality and Space: Trade Theory and Trade Evidence,"
CEPR Discussion Papers
6368, C.E.P.R. Discussion Papers.
- Richard Baldwin & James Harrigan, 2011. "Zeros, Quality, and Space: Trade Theory and Trade Evidence," American Economic Journal: Microeconomics, American Economic Association, vol. 3(2), pages 60-88, May.
- Richard Baldwin & James Harrigan, 2007. "Zeros, Quality and Space: Trade Theory and Trade Evidence," NBER Working Papers 13214, National Bureau of Economic Research, Inc.
- 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.
- 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.
- Rauch, James E., 1999.
"Networks versus markets in international trade,"
Journal of International Economics,
Elsevier, vol. 48(1), pages 7-35, June.
- Eric van Wincoop & Philippe Bacchetta, 2000.
"Does Exchange-Rate Stability Increase Trade and Welfare?,"
American Economic Review,
American Economic Association, vol. 90(5), pages 1093-1109, December.
- Philippe BACCHETTA & Eric VAN WINCOOP, 1999. "Does Exchange Rate Stability Increase Trade and Welfare ?," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 9917, Université de Lausanne, Faculté des HEC, DEEP.
- Decio Coviello & Stefano Gagliarducci, 2010. "Tenure in Office and Public Procurement," CEIS Research Paper 179, Tor Vergata University, CEIS, revised 21 Dec 2010.
- Cushman, David O., 1983. "The effects of real exchange rate risk on international trade," Journal of International Economics, Elsevier, vol. 15(1-2), pages 45-63, August.
- Santos Silva, J.M.C & Tenreyro, Silvana, 2005.
"The Log of Gravity,"
CEPR Discussion Papers
5311, C.E.P.R. Discussion Papers.
- Joao Santos Silva & Silvana Tenreyro, 2005. "The log of gravity," LSE Research Online Documents on Economics 3744, London School of Economics and Political Science, LSE Library.
- Joao Santos Silva & Silvana Tenreyro, 2005. "The Log of Gravity," CEP Discussion Papers dp0701, Centre for Economic Performance, LSE.
- Breton, Albert & Salmon, Pierre, 1996.
"Are Discriminatory Procurement Policies Motivated by Protectionism?,"
Wiley Blackwell, vol. 49(1), pages 47-68.
- BRETON, Albert & SALMON, Pierre, 1995. "Are discriminatory procurement policies motivated by protectionism ?," LATEC - Document de travail - Economie (1991-2003) 1995-10, LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS UMR 5118, Université de Bourgogne.
- McAfee, R. Preston & McMillan, John, 1989. "Government procurement and international trade," Journal of International Economics, Elsevier, vol. 26(3-4), pages 291-308, May.
- Helpman, Elhanan, 1976. "Macroeconomic Policy in a Model of International Trade with a Wage Restriction," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 17(2), pages 262-77, June.
- 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.
- Burguet Roberto & Perry Martin K, 2007.
"Bribery and Favoritism by Auctioneers in Sealed-Bid Auctions,"
The B.E. Journal of Theoretical Economics,
De Gruyter, vol. 7(1), pages 1-27, June.
- Roberto Burguet & Martin Perry, 2000. "Bribery and Favoritism by Auctioneers in Sealed Bid Auctions," Econometric Society World Congress 2000 Contributed Papers 1827, Econometric Society.
- Roberto Burguet & Martin Perry, 2002. "Bribery and Favoritism by Auctioneers in Sealed Bid Auctions," Departmental Working Papers 200205, Rutgers University, Department of Economics.
- Boriss Siliverstovs & Dieter Schumacher, 2007.
"Estimating Gravity Equations: To Log or Not to Log?,"
Discussion Papers of DIW Berlin
739, DIW Berlin, German Institute for Economic Research.
- Boriss Siliverstovs & Dieter Schumacher, 2009. "Estimating gravity equations: to log or not to log?," Empirical Economics, Springer, vol. 36(3), pages 645-669, June.
- Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2007.
"Estimating Trade Flows: Trading Partners and Trading Volumes,"
NBER Working Papers
12927, National Bureau of Economic Research, Inc.
- Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," The Quarterly Journal of Economics, Oxford University Press, vol. 123(2), pages 441-487.
- Rubinstein, Yona & Helpman, Elhanan & Melitz, Marc, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," Scholarly Articles 3228230, Harvard University Department of Economics.
- Shingal, Anirudh, 2009. "Three essays on trade in services : exploring tradability, regional trade and government procurement of services," Economics PhD Theses 0609, Department of Economics, University of Sussex.
- Daniel Diermeier & Hulya Eraslan & Antonio Merlo, 2003. "A Structural Model of Government Formation," Econometrica, Econometric Society, vol. 71(1), pages 27-70, January.
- Vagstad, Steinar, 1995. "Promoting fair competition in public procurement," Journal of Public Economics, Elsevier, vol. 58(2), pages 283-307, October.
- Russell Hillberry & David Hummels, 2002. "Explaining Home Bias in Consumption: The Role of Intermediate Input Trade," NBER Working Papers 9020, National Bureau of Economic Research, Inc.
- 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.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:32814. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.