DP12752 Firm performance and participation in public procurement: Evidence from Sub-Saharan Africa

Author(s): Bernard Hoekman, Marco Sanfilippo
Publication Date: February 2018
Keyword(s): firm performance, government demand, industrial policy, productivity, public procurement, Sub-Saharan Africa
JEL(s): F63, H57, O12
Programme Areas: International Trade and Regional Economics, Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=12752

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.