Working Paper: CEPR ID: DP12752
Authors: Bernard Hoekman; Marco Sanfilippo
Abstract: This paper exploits a firm-level dataset for nineteen Sub-Sharan African countries that provides information on the share of total sales to government entities to provide new insights into the relative importance of participation in public procurement activity for different types of firms. We investigate whether participation in public procurement is associated with realization of the types of goals that underlie industrial policy – an improvement in measures of firm performance – and find that firms that sell a larger share of their output to government entities have better productivity performance. This is most strongly the case for domestically-owned firms, especially small companies, firms engaged in manufacturing activities and those located in the capital city. A positive relationship between participation in public procurement and performance is not observed for foreign-owned firms or companies that are in the service sector.
Keywords: firm performance; productivity; government demand; public procurement; industrial policy; sub-Saharan Africa
JEL Codes: F63; H57; O12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| share of sales to government entities (H79) | firm productivity (D22) |
| domestically-owned firms (F23) | stronger effect on firm productivity (D29) |
| small enterprises (L53) | stronger effect on firm productivity (D29) |
| public procurement participation (H57) | firm performance (L25) |
| foreign-owned firms (F23) | no positive relationship with firm performance (L25) |
| companies in the service sector (L84) | no positive relationship with firm performance (L25) |