Does public procurement for innovation increase innovative efforts? The case of Brazil

The paper uses microdata from the Brazilian Innovation Survey  to assess the effect of public procurement on firms’ private R&D expenditures. The PINTEC 2014 edition included in its  policy  module  a  new  question about  public  procurement  related  to  firms’  innovative  activities. The paper uses this information to define a treated sample composed by firms that participated  in  public  procurement  with  innovative attributes.  The  paper  builds  a  control  sample through coarsened exact matching and tests the effect of innovation-related public procurement on firms’ private R&D to sales ratio. The results suggest a positive impact of public procurement of innovation on R&D intensity. Data also shows that most firms involved in PPI are small and belong to low-technology sectors. These features disclose an important characteristic of the public procurement of innovation: its ability to target small firms and contribute to local development.