The effect of public procurement and its spillovers on innovativeness of enterprises in European countries

Abstract

Public procurement is an important policy instrument which supports innovation activity of enterprises. International links between economies and an increasing access to public procurement markets in European countries justify studying spatial effects of public procurement contracts on innovation activity of companies. The aim of this paper is to assess these relationships using the spatial model. The results show that public procurement contract is a very important innovation policy instrument, since it has the positive impact on innovations in a domestic economy and the negative effect in neighbouring countries. Moreover, the need to meet requirements of public procurement contracts motivates enterprises, both in the own country and in the neighbouring countries, to undertake innovation activities.