Reducing Home Bias in Public Procurement: Trade Agreements and Good Governance

Abstract

Public procurement around the world tends to be heavily skewed toward local firms. This “home bias” has been falling in many countries, independent of whether states have agreed to binding disciplines on government procurement in a trade agreement. Extant research suggests that reciprocally negotiated market access commitments have not been very effective in inducing governments to buy more from foreign suppliers. In this article, I present data and review available research on home bias in procurement. I argue that the evidence suggests policy should put less emphasis on specific market access reciprocity through trade agreements in favor of a greater focus on learning about good procurement practices and principles, enhancing transparency and accountability, and pursuing pro-competitive policies more generally.