IDEAS home Printed from
   My bibliography  Save this paper

Public procurement as an industrial policy tool an option for developing countries?


  • Rainer Kattel
  • Veiko Lember


So far, only 40 countries have joined WTOÿs Government Procurement Agreement (GPA), from the developing world only some East Asian (Hong Kong [China], South Korea, Singapore) economies and ten Eastern European countries are parties to the agreement. This article sets out to answer two interrelated questions: is it advisable for developing countries to use public procurement efforts for development, and should more developing countries join the GPA? We survey key arguments for and against joining the GPA, and by adopting the framework of public procurement for innovation, we argue that government procurement should not be seen only as an indirect support measure for development, but also as a direct vehicle for promoting innovation and industries and, thus, growth and development. We also show that using public procurement for development assumes high levels of policy capacity, which most developing countries lack. In addition, we show how the GPA as well as other WTO agreements make it complicated for the developing countries to benefit from public procurement for innovation. As a result, the article suggests that the developing countries could apply a mix of direct and indirect (so-called soft) publicprocurement- for-innovation measures. In order to do this, developing countries need to develop the policy capacity to take advantage of the complex and multi-layered industrial policy space still available under WTO rules.

Suggested Citation

  • Rainer Kattel & Veiko Lember, 2010. "Public procurement as an industrial policy tool an option for developing countries?," The Other Canon Foundation and Tallinn University of Technology Working Papers in Technology Governance and Economic Dynamics 31, TUT Ragnar Nurkse School of Innovation and Governance.
  • Handle: RePEc:tth:wpaper:31

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Ádám Török, 2007. "Industrial Policy in the New Member Countries of the European Union: A Survey of Patterns and Initiatives Since 1990," Journal of Industry, Competition and Trade, Springer, vol. 7(3), pages 255-271, December.
    2. Cooke, Phil, 2005. "Regionally asymmetric knowledge capabilities and open innovation: Exploring 'Globalisation 2'--A new model of industry organisation," Research Policy, Elsevier, vol. 34(8), pages 1128-1149, October.
    3. Dahlander, Linus & Gann, David M., 2010. "How open is innovation?," Research Policy, Elsevier, vol. 39(6), pages 699-709, July.
    4. Luc Soete, 2007. "From Industrial to Innovation Policy," Journal of Industry, Competition and Trade, Springer, vol. 7(3), pages 273-284, December.
    5. Christensen, Jens Froslev & Olesen, Michael Holm & Kjaer, Jonas Sorth, 2005. "The industrial dynamics of Open Innovation--Evidence from the transformation of consumer electronics," Research Policy, Elsevier, vol. 34(10), pages 1533-1549, December.
    6. Jan Fagerberg, 2003. "Innovation: A Guide to the Literature," Working Papers on Innovation Studies 20031012, Centre for Technology, Innovation and Culture, University of Oslo.
    7. Wolfgang Drechsler, 2004. "Natural versus Social Sciences: On Understanding in Economics," Chapters,in: Globalization, Economic Development and Inequality, chapter 2 Edward Elgar Publishing.
    8. Freeman, Chris & Louca, Francisco, 2002. "As Time Goes By: From the Industrial Revolutions to the Information Revolution," OUP Catalogue, Oxford University Press, number 9780199251056, June.
    9. Freeman, C., 1991. "Networks of innovators: A synthesis of research issues," Research Policy, Elsevier, vol. 20(5), pages 499-514, October.
    10. Sarah Box, 2009. "OECD Work on Innovation – A Stocktaking of Existing Work," OECD Science, Technology and Industry Working Papers 2009/2, OECD Publishing.
    11. Slavo Radosevic, 2009. "Policies for Promoting Technological Catch Up: Towards a Post-Washington Approach," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 1(1), pages 23-52, June.
    12. Mario Cimoli & Giovanni Dosi & Richard R. Nelson & Joseph Stiglitz, 2006. "Institutions and Policies Shaping Industrial Development: An Introductory Note," LEM Papers Series 2006/02, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    13. Mario Cimoli & Jorge Katz, 2003. "Structural reforms, technological gaps and economic development: a Latin American perspective," Industrial and Corporate Change, Oxford University Press, vol. 12(2), pages 387-411, April.
    14. Thomas I. Palley, 2006. "Rethinking Trade and Trade Policy: Gomory, Baumol, and Samuelson on Comparative Advantage," Economics Public Policy Brief Archive ppb_86, Levy Economics Institute.
    15. Erik S. Reinert & Rainer Kattel & Margit Suurna, 2009. "Industrial Restructuring and Innovation Policy in Central and Eastern Europe since 1990," The Other Canon Foundation and Tallinn University of Technology Working Papers in Technology Governance and Economic Dynamics 23, TUT Ragnar Nurkse School of Innovation and Governance.
    Full references (including those not matched with items on IDEAS)


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

    Cited by:

    1. repec:kap:iecepo:v:14:y:2017:i:2:d:10.1007_s10368-016-0371-1 is not listed on IDEAS
    2. Waldemiro Francisco Sorte Jr., 2016. "State intervention for industrial growth: a comparison between Brazil and Japan," International Journal of Public Policy, Inderscience Enterprises Ltd, vol. 12(1/2), pages 1-27.
    3. Karo , Erkki & Kattel , Rainer, 2015. "Innovation Bureaucracy: Does the organization of government matter when promoting innovation?," Papers in Innovation Studies 2015/38, Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy.
    4. Bernard Hoekman, 2015. "International Cooperation on Public Procurement Regulation," RSCAS Working Papers 2015/88, European University Institute.
    5. Niggli, Nicholas C. & Osei-Lah, Kodjo, 2014. "Infrastructure provision and Africa's trade and development prospects: Potential role and relevance of The WTO Agreement on Government Procurement (GPA)," WTO Staff Working Papers ERSD-2014-20, World Trade Organization (WTO), Economic Research and Statistics Division.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    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:tth:wpaper:31. 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: (Oliver Lillepruun) or (Lisa Gilmore). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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.