The Impact of Government Procurement Composition on Private R&D Activities

Viktor Slavtchev and Simon Wiederhold ()

No 2011-036, Jena Economics Research Papers from Friedrich-Schiller-University Jena

Abstract: This paper addresses the question of whether government procurement can work as a de facto innovation policy tool. We develop an endogenous growth model with quality-improving innovation that incorporates industries with heterogeneous innovation sizes. Government demand in high-tech industries increases the market size in these industries and, with it, the incentives for private firms to invest in R&D. At the economy-wide level, the additional R&D induced in high-tech industries outweighs the R&D foregone in all remaining industries. The implications of the model are empirically tested using a unique data set that includes federal procurement in U.S. states. We find evidence that a shift in the composition of government purchases toward high-tech industries indeed stimulates privately funded company R&D.

Keywords: public demand; technological change; endogenous growth (search for similar items in EconPapers)
JEL-codes: E62 H54 H57 O31 O32 O41 (search for similar items in EconPapers)
Date: 2011-09-06
New Economics Papers: this item is included in nep-hme and nep-ino
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://oweb.b67.uni-jena.de/Papers/jerp2011/wp_2011_036.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:jrp:jrpwrp:2011-036

Access Statistics for this paper

More papers in Jena Economics Research Papers from Friedrich-Schiller-University Jena
Bibliographic data for series maintained by Markus Pasche ().