Public Procurement of Innovation: Impacts, Evidence, and Methodological challenges

Public procurement, representing around 12% of GDP in OECD countries, is increasingly recognised as a powerful tool for driving not only innovation but also broader goals like sustainability and economic development.

This research brief synthesises research findings on the impacts of PPI, looking at both theoretical and empirical evidence, as well as methodological challenges in studying its effects.

Public procurement has the potential to shape innovation by:

• Creating demand for new technologies and services (demand-pull effects).
• Facilitating the diffusion of innovations.
• Encouraging firm-level investment in R&D.
• Influencing market structures to support new products and innovations.

Studying PPI involves several complexities, including:

• Defining what constitutes innovation-oriented procurement.
• Establishing clear causality between procurement actions and innovation outcomes.
• Addressing issues related to data access and transparency.

Further research should aim to:

• Improve data collection and linkages.
• Focus on long-term impacts. Explore the effects of PPI across different regions and sectors.

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