Does public procurement for innovation increase innovative efforts? The case of Brazil

Abstract

The paper uses microdata from the Brazilian Innovation Survey to assess the effect of public procurement on firms’ private R&D expenditures. The PINTEC 2014 edition included in its policy module a new question about public procurement related to firms’ innovative activities. The paper uses this information to define a treated sample composed by firms that participated in public procurement with innovative attributes. The paper builds a control sample through coarsened exact matching and tests the effect of innovation-related public procurement on firms’ private R&D to sales ratio. The results suggest a positive impact of public procurement of innovation on R&D intensity. Data also shows that most firms involved in PPI are small and belong to low-technology sectors. These features disclose an important characteristic of the public procurement of innovation: its ability to target small firms and contribute to local development.

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