Publication:
Buy Big or Buy Small?: Procurement Policies, Firms’ Financing, and the Macroeconomy

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dc.contributor.authordi Giovanni, Julian
dc.contributor.authorGarcĂ­a-Santana, Manuel
dc.contributor.authorJeenas, Priit
dc.contributor.authorMoral-Benito, Enrique
dc.contributor.authorPijoan-Mas, Josep
dc.date.accessioned2023-07-25T18:11:18Z
dc.date.available2023-07-25T18:11:18Z
dc.date.issued2023-07-25
dc.description.abstractThis paper provides a framework to study how different allocation systems of public procurement contracts affect firm dynamics and long-run macroeconomic outcomes. It builds a novel panel dataset for Spain that merges public procurement data, credit register loan data, and quasi-census firm-level data. The paper provides evidence consistent with the hypothesis that procurement contracts act as collateral for firms and help them grow out of their financial constraints. The paper then builds a model of firm dynamics with asset- and earnings-based borrowing constraints and a government that buys goods and services from private sector firms, and uses it to quantify the long-run macroeconomic consequences of alternative procurement allocation systems. The findings show that policies which promote the participation of small firms have sizeable macroeconomic effects, but the net impact on aggregate output is ambiguous. While these policies help small firms grow and overcome financial constraints, which increases output in the long run, these policies also increase the cost of government purchases and reduce saving incentives for large firms, decreasing the effective provision of public goods and output in the private sector, respectively. The relative importance of these forces depends on how the policy is implemented and the type and strength of financial frictions.en
dc.identifierhttp://documents.worldbank.org/curated/en/099734007242321169/IDU0fe37cff9055fd040960886005f45bc3d3234
dc.identifier.doi10.1596/1813-9450-10522
dc.identifier.urihttps://openknowledge.worldbank.org/handle/10986/40077
dc.languageEnglish
dc.language.isoen
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Papers; 10522
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttps://creativecommons.org/licenses/by/3.0/igo/
dc.subjectGOVERNMENT PROCUREMENT
dc.subjectFINANCIAL FRICTION
dc.subjectCAPITAL ACCUMULATION
dc.subjectAGGREGATE PRODUCTIVITY
dc.subjectPROCUREMENT RULES
dc.subjectFIRM DYNAMICS
dc.subjectSMALL FIRM GROWTH CONSTRAINT
dc.titleBuy Big or Buy Small?en
dc.title.subtitleProcurement Policies, Firms’ Financing, and the Macroeconomyen
dc.typeWorking Paper
dspace.entity.typePublication
okr.crossref.titleBuy Big or Buy Small?: Procurement Policies, Firms’ Financing, and the Macroeconomy
okr.date.disclosure2023-07-24
okr.date.lastmodified2023-07-24T00:00:00Zen
okr.doctypePolicy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/099734007242321169/IDU0fe37cff9055fd040960886005f45bc3d3234
okr.guid099734007242321169
okr.identifier.docmidIDU-fe37cff9-55fd-4096-8860-5f45bc3d3234
okr.identifier.doi10.1596/1813-9450-10522
okr.identifier.doihttp://dx.doi.org/10.1596/1813-9450-10522
okr.identifier.externaldocumentum34122163
okr.identifier.internaldocumentum34122163
okr.identifier.reportWPS10522
okr.import.id1236
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/099734007242321169/pdf/IDU0fe37cff9055fd040960886005f45bc3d3234.pdfen
okr.region.countrySpain
okr.topicGovernance::National Governance
okr.topicInternational Economics and Trade::Government Procurement
okr.topicPrivate Sector Development::Small and Medium Size Enterprises
okr.topicPrivate Sector Development::Business in Development
okr.unitDECRG: Macroeconomics & Growth (DECMG)
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