Public Procurement for Innovation

Public Procurement for Innovation

Eu-SPRI Forum on Science, Technology and Innovation Policy series

Edited by Charles Edquist, Nicholas S Vonortas, Jon M Zabala-Iturriagagoitia and Jakob Edler

This book focuses on Public Procurement for Innovation. Public Procurement for Innovation is a specific demand-side innovation policy instrument. It occurs when a public organization places an order for a new or improved product to fulfill certain needs that cannot be met at the moment of the order. The book provides evidence of the potential benefits to public and private actors from the selective use of this policy instrument and illustrates the requirements and constraints for its operationalization. The book intends to significantly improve the understanding of key determinants of effective public procurement aiming to promote innovative capabilities in the supplying sectors and beyond. It provides both case studies and conceptual contributions that help extend the frontier of our understanding in areas where there are still significant gaps.

Chapter 6: Innovation and public procurement in the United States

Nicholas S. Vonortas

Subjects: economics and finance, economics of innovation, innovation and technology, economics of innovation, innovation policy, politics and public policy, public administration and management


The public sector accounts for a significant part of economic activity in Organisation for Economic Co-operation and Development (OECD) member countries. The average share of government expenditures in gross domestic product (GDP) is above 40 percent, varying from over 50 percent in Sweden and France, to about 35 percent in Japan and the United States, to around 20 percent in Mexico (OECD, 2009). The performance of the public sector, along with its efficiency in providing public services, has been a major concern in democratic societies since ancient times. The primary source of this concern is the relative size of the public sector and the fact that it administers taxpayer funds. Pressures on the public sector for increased efficiency and productivity of resource use have mounted in recent years resulting in many calls for innovation, both process and product and service innovation. As far as the public sector is concerned, process innovation means providing more (perhaps marginally improved) services at the same (or even lower) cost. Product innovation means providing new or significantly improved services. In either case, public expenditures for acquisition can influence the ability of the rest of the economy to produce new and significantly improved products and services, or to produce them more efficiently.

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