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Public Expenditure and International Specialisation

Author

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  • Brulhart, Marius
  • Trionfetti, Federico
Abstract
It is widely recognised that public-sector purchasers tend to discriminate in favour of domestic suppliers. We study the consequences of home-biased public procurement on international specialisation. In the theoretical analysis we find two effects. First, a country will specialise in the sector for which it has relatively large home-biased procurement (the "pull" effect). Second, home-biased procurement can counter agglomeration forces and thereby attenuate the overall degree of international specialisation (the "spread" effect). Our empirical analysis, conducted on input-output data for the European Union, yields supporting evidence for the pull effect and some support for the spread effect. Es ist hinlänglich bekannt, dass Käufer aus dem öffentlichen Sektor dazu neigen, locale Zulieferer gegenüber ausländischen Produzenten zu bevorzugen. Wir untersuchen die Folgen solch Heimmarkt-bevorzugender Beschaffungspraktiken für die internationale wirtschaftliche Spezialisierung. In unserer theoretischen Analyse stoßen wir auf zwei Effekte. Einerseits finden wir, dass sich Länder tendenziell auf Industrien spezialisieren, auf die ein relative großer Anteil ihrer öffentlichen Ausgaben entfällt. Wir nennen dies den Anziehungseffekt ("pull effect") öffentlicher Ausgaben. Andererseits zeigt unser Modell, dass ein international symmetrisch hoher Anteil der öffentlichen Hand an der Gesamtnachfrage industriellen Agglomerationskräften entgegenwirken kann und damit die Intensität der industriellen Spezialisierung einzelner Länder verringert. Wir nennen dies den Dispersionseffekt ("spread effect") öffentlicher Ausgaben. Im empirischen Teil ziehen wir Input-Output-Daten für EULänder heran. Sowohl der Anziehungseffekt als auch der Dispersionseffekt werden von den Daten bestätigt.

Suggested Citation

  • Brulhart, Marius & Trionfetti, Federico, 2001. "Public Expenditure and International Specialisation," Discussion Paper Series 26299, Hamburg Institute of International Economics.
    • Handle: RePEc:ags:hwwadp:26299
    DOI: 10.22004/ag.econ.26299
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    References listed on IDEAS

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    1. McAfee, R. Preston & McMillan, John, 1989. "Government procurement and international trade," Journal of International Economics, Elsevier, vol. 26(3-4), pages 291-308, May.
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    Cited by:

    1. Brülhart, Marius & Trionfetti, Federico, 2009. "A test of trade theories when expenditure is home biased," European Economic Review, Elsevier, vol. 53(7), pages 830-845, October.
    2. Sanguinetti, Pablo & Traistaru, Iulia & Volpe Martincus, Christian, 2004. "Economic integration and location of manufacturing activities: Evidence from MERCOSUR," ZEI Working Papers B 11-2004, University of Bonn, ZEI - Center for European Integration Studies.
    3. Federico Trionfetti, 2015. "Public Debt and Economic Geography," International Regional Science Review, , vol. 38(1), pages 92-113, January.
    4. García-Alonso, María D.C. & Levine, Paul, 2008. "Strategic procurement, openness and market structure," International Journal of Industrial Organization, Elsevier, vol. 26(5), pages 1180-1190, September.
    5. Ulrike Stierle-von Schütz, 2005. "Fiscal Design and the Location of Economic Activity," ERSA conference papers ersa05p539, European Regional Science Association.
    6. Jürgen Von Hagen, 2007. "Institutionelle Gestaltung föderaler Systeme: Theorie und Empirie," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 8(2), pages 109-109, March.
    7. Cornelius Bähr & Ulrike Stierle‐von Schütz & Matthias Wrede, 2007. "Dezentralisierung in den EU‐Staaten und räumliche Verteilung wirtschaftlicher Aktivitäten," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 8(2), pages 110-129, March.
    8. Federica Calidoni, 2004. "Aggregate and Disaggregate Analysis of the Effects of Government Expenditure on Growth," Dundee Discussion Papers in Economics 160, Economic Studies, University of Dundee.

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    More about this item

    Keywords

    Public Economics;

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • F1 - International Economics - - Trade
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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