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Public expenditure and international specialisation

Author

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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.

Suggested Citation

  • Brülhart, Marius & Trionfetti, Federico, 2001. "Public expenditure and international specialisation," HWWA Discussion Papers 141, Hamburg Institute of International Economics (HWWA).
  • Handle: RePEc:zbw:hwwadp:26299
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    References listed on IDEAS

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    1. Trionfetti, Federico, 2001. "Public Procurement, Market Integration, and Income Inequalities," Review of International Economics, Wiley Blackwell, vol. 9(1), pages 29-41, February.
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    3. Miyagiwa, Kaz, 1991. "Oligopoly and Discriminatory Government Procurement Policy," American Economic Review, American Economic Association, vol. 81(5), pages 1320-1328, December.
    4. Federico Trionfetti, 2000. "Discriminatory Public Procurement and International Trade," The World Economy, Wiley Blackwell, vol. 23(1), pages 57-76, January.
    5. 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.
    6. 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.
    7. McAfee, R. Preston & McMillan, John, 1989. "Government procurement and international trade," Journal of International Economics, Elsevier, vol. 26(3-4), pages 291-308, May.
    8. 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.
    9. 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.
    10. Branco, Fernando, 1994. "Favoring domestic firms in procurement contracts," Journal of International Economics, Elsevier, vol. 37(1-2), pages 65-80, August.
    11. Vagstad, Steinar, 1995. "Promoting fair competition in public procurement," Journal of Public Economics, Elsevier, vol. 58(2), pages 283-307, October.
    12. repec:hhs:iuiwop:430 is not listed on IDEAS
    13. 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.
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    Citations

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    Cited by:

    1. Brülhart, Marius & Trionfetti, Federico, 2009. "A test of trade theories when expenditure is home biased," European Economic Review, Elsevier, vol. 53(7), pages 830-845, October.
    2. Sanguinetti, Pablo & Traistaru, Iulia & Volpe Martincus, Christian, 2004. "Economic integration and location of manufacturing activities: Evidence from MERCOSUR," ZEI Working Papers B 11-2004, University of Bonn, ZEI - Center for European Integration Studies.
    3. Federico Trionfetti, 2015. "Public Debt and Economic Geography," International Regional Science Review, , vol. 38(1), pages 92-113, January.
    4. García-Alonso, María D.C. & Levine, Paul, 2008. "Strategic procurement, openness and market structure," International Journal of Industrial Organization, Elsevier, vol. 26(5), pages 1180-1190, September.
    5. Ulrike Stierle-von Schütz, 2005. "Fiscal Design and the Location of Economic Activity," ERSA conference papers ersa05p539, European Regional Science Association.
    6. Jürgen von Hagen, 2007. "Institutionelle Gestaltung föderaler Systeme: Theorie und Empirie," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 8(2), pages 109-109, March.
    7. 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, March.
    8. 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.

    More about this item

    Keywords

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

    JEL classification:

    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
    • F1 - International Economics - - Trade
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • H5 - Public Economics - - National Government Expenditures and Related Policies

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