Nurturing domestic firms through public procurement: A comparison between Brazil and Japan

Abstract

Due to the significant amount of financial resources involved, public procurement can be used as a useful pull mechanism to stimulate private investment and to influence market dynamics, entrepreneurship, and R&D activities, in order to promote the growth of local industries. This study examines recent policies implemented by the Brazilian government aimed at using public procurement to foster the domestic industry. It also discusses how the Japanese government used public procurement as a tool to promote the growth of domestic firms before the country signed the World Trade Organization’s Government Procurement Agreement (GPA) in 1995, in order to present the advantages and drawbacks of each country’s approach. This study argues that, while the pre-GPA Japanese approach was efficient in creating more significant partnerships between the government and key domestic firms to achieve industrial policy objectives in strategic sectors, the Brazilian recently implemented policy has the advantage of being more accountable and transparent. This research argues for the possibility to harmonize transparency and accountability with initiatives to nurture domestic firms in public tenders and contends that an efficient strategy to use public procurement to promote the growth of the national industry should be a mixture of the Brazilian and Japanese approaches.

Firms’ experience of SME-friendly policy and their participation and success in public procurement

“…Public procurement is understood as having a key role to play in supporting the SME sector specifically and, at a more overarching level, fostering a dynamic enterprise environment (Preuss, 2011;Sorte Junior, 2016). Contemporary enterprise policy bears this out, with procurement featuring prominently as a policy lever in both the EU Small Business Act 2008 and the US Small Business Act.…”

“…Without doubt, something akin to market failure exists. This is neither desirable nor tenable if governments are serious about fostering dynamic economies with SMEs as the engines of growth, innovation and employment creation (Glover, 2008;Preuss, 2011;Sorte Junior, 2016). Accounting for, on average, 12.8 per cent of GDP and 29 per cent of total government expenditure across developed economies, the public procurement market is too commercially important for SMEs to be excluded from (OECD, 2013).…”

Governing environmental conflicts in China: Lessons learned from the case of the Liulitun waste incineration power plant in Beijing

“…The Chinese governance is characterized by self-learning and self-adjustments in achieving development and avoiding disastrous revolutions (Jing, 2017). Some researchers attempt to explore if this model (as well as models of the other developed countries) can be replicated in other developing countries (see Sorte Junior, 2016). We argue that there is no “one-size-fits-all” model applicable in all contexts, and we should emphasize the importance of a learning culture in governance practices and reject determinisms and biases about the best models (Pupphim de Oliveira et al., 2015).…”

Contracting in Brazilian public administration: A machine learning approach

“…Public procurement can be used to achieve social, economic and technological objectives (Ribeiro, Júnior, Raun, & Li, , p. 4), to promote small and medium business in developing countries (Patil, , p. 391) or even enforce sustainability, as analysed by Aragão and Jabbour (). It refers to the acquisition of goods or contracting services by the public administration (Sorte Junior, , p. 30), which are ultimately used to provide some service to the population. However, in the public procurement context, which generally results in contracts with the government, international rules dictate the suppliers must receive equal treatment, warranting any favouritism of products or companies discrimination, as described by Ribeiro et al (, pp.…”

“…In this regard, public administration cannot directly choose the companies with which it enters into contracts. Specifying the needs and requirements in the contracting process, Brazilian law requires that the administration offers equal treatment, leaving it only to monitor its contracts and suppliers (Sorte Junior, ). Company risk assessment mechanisms are therefore indispensable in the context of e‐government processes because they can alert the public manager as to which contracts may be terminated due to a company's inability to pay or disqualification.…”