The role of public procurement as innovation lever: evidence from Italian manufacturing firms

The study focuses on the impact exerted on private R&D expenditures by regular and innovative public procurement when taken in combination or insolation with supply-push measures. The econometric analysis relies on a pulled sample of 4206 Italian manufacturing firms observed between 2010 and 2014. The empirical exercise confirms previous evidences on the relevance of technology-push instruments in sustaining firms’ innovativeness. On the contrary, the ability of public procurement activities in shaping innovative investments is found to depend on a number of instances related to: (i) the adoption of contemporaneous supply side measures; (ii) the inclusion of innovative demand in procurement contracts. The analysis provides important suggestions with respect to the potential effectiveness of demand-side tools when implemented in weak administrative and innovation systems, as in the Italian case. Moreover, it is shown that the design of the policy mix matters, and its effectiveness improves when demand-side and supply-side instruments are jointly implemented.