Econometric Analyses of Home Bias in Government Procurement

Anirudh Shingal

Review of International Economics, 2015, vol. 23, issue 1, 188-219

Abstract: The extent of discrimination in government procurement and its impact on economic efficiency has attracted both theoretical and analytical work, but little econometric evidence. We bridge this gap by building a new sector-level dataset on domestic and foreign purchases by Japanese and Swiss governments over 1990–2003 to undertake “new” econometric analyses. Unlike previous work, we explain home-bias using variables inspired by the political economy, trade-macroeconomic and procurement literatures. We also provide “new” econometric evidence for previous theoretical predictions. Our results reveal the importance of domestic-foreign productivity differences in governments’ cross-border purchases and also support previous theoretical predictions. However, Membership of the World Trade Organizations's Agreement on Government Procurement is not found to increase market access.

Date: 2015
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