Government Procurement Policy in Developing Countries: The Case of Petrobras

Abstract

The aim of this article is to discuss whether public procurement policy can promote innovation by firms located in developing countries. The literature on technological learning is used to create a typology for assessing the impact of public procurement in developing countries from the standpoint of innovation. Petrobras, a Brazilian state-owned enterprise, was chosen as a case study. Petrobras is a global leader in the field of deepwater oil production technology and so offers an interesting opportunity to investigate whether government procurement in developing countries is used to promote the capability of domestic firms to develop innovations. The article presents the findings of a field survey on P-51, a platform that was ordered by the Brazilian state-owned enterprise and began producing in 2009. The case study is based on information collected from interviews with managers of Petrobras, EPC contractors and some of the firms subcontracted to work on P-51.

Unveiling the public procurement market in Brazil: A methodological tool to measure its size and potential

“…From the early 2000s, Petrobras adopted a purchasing policy with local content requirements. This strategy, although it pays insufficient attention to the technological development of local suppliers (Ribeiro & Furtado, ), brought job creation, attracted foreign companies to the country and strengthened the supply chain of equipment and services for the oil industry.…”

The irrationality of Petrobras’ divestments in refining

“…This law stated that any company, other than national companies, could carry out the exploration, production, transport, refining, import and export of petroleum in Brazil, upon authorization, permission or concession fromthe public authorities. The "Petroleum Law" endedthe monopoly held by Petrobras throughout the main stages of the country's oil sector (Ribeiro and Furtado, 2014).…”

“…The literature that focuses on Petrobras places most emphasis on the company's technological capability in the segment of E&P (Furtado and Freitas, 2000;Dantas and Bell, 2011;Mendonça and Oliveira, 2013;Ribeiro and Furtado, 2014;Schutte, 2013;Florencio, 2016). This approach may be seen as understandablesince the company's flagship nowadaysis the E&P segment.…”

Firm Performance and Participation in Public Procurement: Evidence from Sub-Saharan Africa

“…This econometric evidence complements the case study literature. See e.g., Ribeiro and Furtado (2014) for references to the literature and a case study of public procurement policy in Brazil to promote innovation (focusing on a Petrobras deep-water oil production platform contract). The richness of information provided by the AIS illustrates the heterogeneous dimensions of firms in the region.…”