Effectiveness of public procurement in stimulating innovation outputs: EU firms

Abstract

Over the last decade a number of public procurement directives at national and European Union level have sought to enhance the effectiveness of public procurement in stimulating firm-level innovation. Yet there is an absence of empirical evidence relating to the impact of public procurement on innovation. In this paper, we address this gap by evaluating the effectiveness of public procurement on a range of innovation output indicators. Using the Community Innovation Survey 2012 dataset, we empirically estimate direct and indirect treatment effects of public procurement in different country groups (Innovation Leaders, Innovation Followers and Moderate Innovators). We find no systemic direct effects on innovation outputs across country groups. However, for indirect effects, our results indicate strong universal effects on non-technological innovations. Our empirical evidence provides some policy implications, in particular relating to “innovation-friendly” public procurement.