Examining discriminatory procurement practices in developing countries

Abstract

Developing countries face a problem of making a decision of opening up public procurement markets to all suppliers irrespective of their country of origin. The perceived benefit of opening up procurement markets (non-discriminatory practices) is that it enhances competitiveness, leading to efficient public resources utilisation. Governments discriminating against foreign firms in favour of local suppliers are motivated by the desire to achieve benefits such as, stimulating infant industries, fostering underdeveloped regions and creating employment. This paper examines both arguments and makes recommendations as to how developing countries could open up procurement markets without losing their social and economic objectives.