Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/73722
Authors: 
Slavtchev, Viktor
Wiederhold, Simon
Year of Publication: 
2012
Series/Report no.: 
Ifo Working Paper 135
Abstract: 
Governments purchase everything from airplanes to zucchini. This paper investigates whether the technological intensity of government demand affects corporate R&Dactivities. In a quality-ladder model of endogenous growth, we show that an increase in the share of government purchases in high-tech industries increases the rewards for innovation, and stimulates private-sector R&D at the aggregate level. We test this prediction using administrative data on federal procurement performed in US states. Both panel fixed effects and instrumental variable estimations provide results in line with the model. Our findings bring public procurement within the realm of the innovation policy debate.
Subjects: 
Government demand
technological change
endogenous growth
innovation policy
JEL: 
E62
H57
O31
O33
O38
Document Type: 
Working Paper

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