Working Paper: CEPR ID: DP14836
Authors: Bernard Hoekman; Bedri Kamil Onur Tas
Abstract: This paper investigates the relationship between regulatory policies governing public procurement and participation by small and medium enterprises (SMEs), using a large dataset on European procurement. We find that countries with better quality procurement regulation have greater SME participation and higher probability that SMEs win contracts. Dividing contracts into smaller lots bolsters participation by SMEs, but only increases the probability of SMEs winning contracts for small value lots (€25,000 or less). Counterfactual simulations suggest if governments want to enhance participation by SMEs in public procurement the focus should be on improving the overall quality of procurement processes.
Keywords: public procurement; sme participation; good practice; regulation; lot size
JEL Codes: H57; O12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| better PP regulation (L59) | higher SME participation rates (E69) |
| better PP regulation (L59) | increased probabilities of SMEs winning contracts (L25) |
| higher quality procurement processes (H57) | enhance SME participation (L53) |
| higher quality procurement processes (H57) | increase success in winning contracts (L14) |
| open competitive procedures (H57) | significantly increases SME participation (E69) |
| larger contracts (L14) | reduce SME involvement (E69) |
| division of contracts into smaller lots (L14) | bolsters SME participation (L53) |
| contracts valued at €25,000 or less (K12) | increase likelihood of SMEs winning contracts (L53) |
| improving overall procurement quality (H57) | essential for enhancing SME participation (L53) |