As a key activity for governments, public procurement of goods and services can play a major role in delivering public services, fostering public sector efficiency, and contributing to key governmental agendas like the digital transformation and the environmental agenda. Public procurement accounts for a large share of the taxpayers’ money. All levels of government are expected to carry it out efficiently and with high standards of integrity to ensure the quality of service delivery and safeguard the public interest.
In 2023, public procurement expenditure as a share of GDP across the OECD stood at 12.7%, an increase from 12.2% in 2019, and a slight decrease from 13% in 2021. The same trend was seen across the OECD-EU countries, where public procurement expenditure as a share of GDP stood at 14.8% in 2023, 13.9% in 2019, and 15% in 2021 (Figure 11.1). The modest decline in the ratio to GDP from 2021 to 2023 was largely attributable to a more rapid increase in GDP relative to the growth in procurement spending.
On the other hand, public procurement relative to total government expenditures in 2023 remained at a similar level to that in 2019 (29.9%) but increased by 1.6 percentage points compared to 2021 (28.3%) across the OECD. Across the OECD-EU countries, public procurement expenditure as a share of total government expenditures in 2023 represented 30%, increasing by 0.2 percentage points compared to 2019 (29.8%) and 0.8 percentage points compared to 2021 (29.2%). The distribution of public procurement expenditure between the central government and sub-national governments has only slightly changed over the past five years, with 62.5% of OECD countries’ procurement spending at sub-national levels in 2023, compared to 61.3% in 2021 (Online Figure J.8.1).
As public procurement is key to delivering public services, it is used across all spending functions of governments, from health to environmental protection, public order, and economic affairs (comprising infrastructure, transport, communication, energy, and R&D). As in previous years, health accounted for the largest share of public procurement spending, at 29.7% on average across OECD countries in 2023. This was followed by economic affairs (16.7%), education (11.4%), social protection (10.1%), and defence (9.9%). Belgium, Costa Rica, and Japan spent more than 43% of their public procurement expenditure in the health sector. Economic affairs represented more than 25% of public procurement spending in Latvia and Poland, as did social protection in the Netherlands (Table 11.1). Compared to 2019, public procurement spending increased only for public services (0.7 percentage points), health (0.5 percentage points), and public order and safety (0.2 percentage points) (Online Table J.8.1). However, compared to 2021, most spending functions saw slight increases in public procurement spending, except for health and economic affairs which fell by 2.1 and 0.2 percentage points respectively. This shows a dwindling influence of the COVID-19 pandemic and the measures to mitigate its effects, while efforts to rebuild are still underway. With an increasingly unstable geopolitical landscape and intensifying security challenges, notably in the EU, defence is starting to record an increase in public procurement spending by 0.4 percentage points since 2021.
