IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/32814.html
   My bibliography  Save this paper

Foreign market access in government procurement

Author

Listed:
  • Shingal, ANIRUDH

Abstract

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.

Suggested Citation

  • Shingal, ANIRUDH, 2011. "Foreign market access in government procurement," MPRA Paper 32814, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:32814
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/32814/1/MPRA_paper_32814.pdf
    File Function: original version
    Download Restriction: no

    File URL: https://mpra.ub.uni-muenchen.de/38781/1/MPRA_paper_38781.pdf
    File Function: revised version
    Download Restriction: no

    File URL: https://mpra.ub.uni-muenchen.de/39013/1/MPRA_paper_39013.pdf
    File Function: revised version
    Download Restriction: no

    References listed on IDEAS

    as
    1. McAfee, R. Preston & McMillan, John, 1989. "Government procurement and international trade," Journal of International Economics, Elsevier, vol. 26(3-4), pages 291-308, May.
    2. 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 262-277, June.
    3. 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.
    4. Daniel Diermeier & Hulya Eraslan & Antonio Merlo, 2003. "A Structural Model of Government Formation," Econometrica, Econometric Society, vol. 71(1), pages 27-70, January.
    5. 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.
    6. Roberto Burguet & Yeon-Koo Che, 2004. "Competitive Procurement with Corruption," RAND Journal of Economics, The RAND Corporation, vol. 35(1), pages 50-68, Spring.
    7. 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.
    8. Boriss Siliverstovs & Dieter Schumacher, 2009. "Estimating gravity equations: to log or not to log?," Empirical Economics, Springer, vol. 36(3), pages 645-669, June.
    9. Federico Trionfetti, 2000. "Discriminatory Public Procurement and International Trade," The World Economy, Wiley Blackwell, vol. 23(1), pages 57-76, January.
    10. 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.
    11. 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.
    12. 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.
    13. Breton, Albert & Salmon, Pierre, 1996. "Are Discriminatory Procurement Policies Motivated by Protectionism?," Kyklos, Wiley Blackwell, vol. 49(1), pages 47-68.
    14. repec:aea:aejpol:v:9:y:2017:i:3:p:59-105 is not listed on IDEAS
    15. 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.
    16. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
    17. Rogoff, Kenneth, 1990. "Equilibrium Political Budget Cycles," American Economic Review, American Economic Association, vol. 80(1), pages 21-36, March.
    18. Decio Coviello & Stefano Gagliarducci, 2017. "Tenure in Office and Public Procurement," American Economic Journal: Economic Policy, American Economic Association, vol. 9(3), pages 59-105, August.
    19. Vagstad, Steinar, 1995. "Promoting fair competition in public procurement," Journal of Public Economics, Elsevier, vol. 58(2), pages 283-307, October.
    20. 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.
    21. 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.
    22. Rauch, James E., 1999. "Networks versus markets in international trade," Journal of International Economics, Elsevier, vol. 48(1), pages 7-35, June.
    23. 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.
    24. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chiara Carboni & Elisabetta Iossa & Gianpiero Mattera, 2017. "Barriers to Public Procurement: A Review and Recent Patterns in the EU," IEFE Working Papers 92, IEFE, Center for Research on Energy and Environmental Economics and Policy, Universita' Bocconi, Milano, Italy.

    More about this item

    Keywords

    Government procurement; home-bias; GPA; Japan; Switzerland;

    JEL classification:

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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. 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). General contact details of provider: http://edirc.repec.org/data/vfmunde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.