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Session 4: ECONOMIC AND DEVELOPMENTAL OBJECTIVES

OF GOVERNMENT PROCUREMENT

Dar as Salaam, 14-17 January 2003

Vesile Kulaçoglu, WTO Secretariat

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SIZE OF PROCUREMENT MARKETS

POLICY OBJECTIVES

INSTRUMENTS USED

TRANSPARENCY

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System of National AccountsSystem of National Accounts

GDP = C + I + [X -M] + #inv. GDP = C + I + [X -M] + #inv.

GDPGDP = C = Cnon-gnon-g + I + Inon-gnon-g + + GG + [X -M] + #inv.+ [X -M] + #inv.

GG = Cons = Consgov gov + Invest+ Investgovgov

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Government ProcurementGovernment Procurement

GG = CONS + INV = CONS + INV

Tradable sharesTradable shares (Theoretical)(Theoretical)

GG - - CCompensation ompensation EEmployees mployees (CE)(CE)

GG - - CE - DefenceCE - Defence

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World GP Market in 1998World GP Market in 1998

G = Consumption + Investment World World

G G - CE G - CE - DefTrade

1998

GDP 1998

US$ billion 5,500.6 2,563.5 2,083.0 6,743.0 29,357.7

% of GDP 18.9% 8.73% 7.10% 22.97%

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Other Other CountriesCountries

G = Consumption + Investment

G G - CE G - CE - Def

19.96% 9.17% 7.57%

14.48% 6.89% 5.10%

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POLICY OBJECTIVES

MINIMIZE PROCUREMENT COSTS

Value for money

ECONOMIC DEVELOPMENT

NON-ECONOMIC OBJECTIVES

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ECONOMIC DEVELOPMENT

OBJECTIVES Industrial Development

infant-industry

Transfer of Technology local content requirements

Offset market failures SMEs

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NON-ECONOMIC OBJECTIVES

Support of minority enterprises(affirmative action, women)

Foster environment or labour protection

National security

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INSTRUMENTS

To attain

objective of value for money

competition

transparency other objectives

limit competition

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Instruments used to limit competition

import bans

preferences in favour of domestic

supplies and suppliers (e.g. Buy

American Act)

offset requirements

set-asides for SMEs, minority businesses

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Instruments used to limit competition

policies favouring a region, labour-

surplus areas in national development

framework

furtherance of agricultural support and

human feeding programmes

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PREFERENCES

PRICE PREFERENCES

Price differentials varying from 3 to 20%

SPECIFIC PREFERENCES

categories of goods and services (syringes,

telecom)

sectors of economy (transportation, electricity)

TIE-BREAKS

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OFFSETS Local content requirements

(% of human resources or domestic inputs)

investment requirements (venture capital)

licensing of technology; R&D counter-trade training sub-contracting

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Sources:

Slides 3-6 : Denis Audet, OECD Study on Government Procurement Markets, 2002.

Slides 7-10: Bernard Hoekman, Word Bank, WTO Symposium in Transparency in Government Procurement, 9-10 October 2002, Geneva