Public Procurement, Trade and Industrial Policies

4. Conclusions

Abstract

This chapter highlights the need for further analytical work and research on the linkages between public procurement, trade and industrial policies to support the policy dialogue and evidence informed decisions. It underlines the need for better impact assessment of procurement-based interventions and suggests updating the 2017 OECD Taxonomy of measures affecting trade in government procurement processes, and greater use of digital tools to improve access to public procurement markets.

The report highlights the strong and complex linkages between public procurement, trade, and industrial policies. Public procurement can act both as a driver of global trade and as a lever to support industrial policy goals. Over the past decade, globalisation has been the engine of growth, lifting millions out of poverty and fostering innovation through interconnected markets. In this context, trade and industrial policy choices should aim to strengthen the resilience of global value chains without eroding the potential benefits for efficiency and innovation or overlooking the income gains from lowering trade barriers (OECD, 2024[1]). However, the tension between open trade and growing protectionist pressures is reshaping procurement policies worldwide. While procurement systems have traditionally balanced openness to global competition with domestic priorities, recent trends reflect a shift toward protectionism. Such measures may have a significant impact on economies and people as they could disrupt global trade and investment flows (OECD, 2024[1]). This would be particularly damaging for emerging markets that rely heavily on global integration for economic stability and development.

These findings feed the growing debate about the sometimes-blurry line between using public procurement strategically to support industrialisation efforts embedded in the “value for money” concept and adopting measures that risk falling into protectionism. All these points show that further analytical work and research are needed in this area to support the policy dialogue and support evidence informed decisions in this area.

4.1. Updating the 2017 OECD Taxonomy of measures affecting trade in government procurement processes

The OECD taxonomy of measures affecting trade in government procurement processes was developed with the following two main objectives: i) to identify measures that can impact access to cross-border procurement, and ii) to determine whether and how they impact foreign suppliers (OECD, 2017[2]). The taxonomy was developed in 2017 before the poly-crisis environment and successive global shocks of recent years that highlighted the crucial role of trade in providing critical goods and services, while also exposing vulnerabilities in some countries’ reliance on imported essential goods.

Given these developments in the last decade and considering the evolving and more volatile context of barriers to cross-border public procurement and the increasing use of digital technologies, it could be beneficial to update the OECD Taxonomy. The revision could integrate the perspectives of both the trade and public procurement communities, reflect new types of measures observed since 2017 and support countries in identifying less trade-restrictive approaches to achieving legitimate policy objectives.

4.2. Advancing further the impact assessment of using public procurement to support industrial goals

The principle on “Balance” of the OECD Recommendation on public procurement, calls countries to employ appropriate impact assessment methodology to measure the effectiveness of procurement in achieving policy objectives (OECD, 2015[3]). While the OECD taxonomy is not designed “to pass judgment on the legitimacy of the public policy objectives that measures seek to achieve”, impact assessment remains essential to ensure that public procurement effectively supports them. Impact refers to the extent to which the policy or programme has generated or is expected to generate significant positive or negative, intended or unintended, higher-level effects. It addresses the ultimate significance and potentially transformative effects, i.e., the longer-term social, environmental, and economic effects, beyond the immediate results (OECD, 2025[4]).

In this context, of any use of the public procurement to support policy objectives should be measured according to appropriate milestones, to provide policy makers with necessary information regarding the benefits and costs of such use (OECD, 2015[3]). This should also apply to the use of public procurement to support industrial policy goals and other objectives that impact economies, including productivity and innovation. This is particularly relevant in a context where countries strive to reinforce economic sovereignty and strengthen the resilience of value chains.

As mentioned in Chapter 2, this report does not aim to assess the effectiveness of industrial or trade policies. Data from the second implementation report of the OECD Recommendation on public procurement shows that only about 23% of respondents report evaluating the impact of public procurement on the economy (OECD, 2025[4]). There is therefore the need to advance the development of clear methodologies that could be used across countries. Such methodologies should include a cost-benefit analysis (detailing also who will bear the costs) and highlight the long-term implications of measures considered. Their development will require: i) multi-disciplinary skills, ii) co-ordination across different policy communities, including trade and industrial policy to ensure policy coherence, and iii) continued efforts to improve the availability and quality of data (both on procurement and on the economy).

4.3. Leveraging digital technologies to enhance access to public procurement markets

The digital transformation is accelerating worldwide and is already and will be having a profound impact on economies across sectors (OECD, n.d.[5]), particularly in terms of productivity and employment. The digital transformation is therefore also impacting trade and industrial policies and outcomes. For instance, it has significantly reduced the costs of participating in international trade, reshaping what we trade, how we trade, and who can take part (OECD, n.d.[5]). Public procurement is no exception: digital technologies have radically reshaped public procurement over the past few decades. Today, the digital transformation of public procurement involves rethinking the entire public procurement lifecycle, better linking procurement systems to other public finance and data systems, integrating digital tools into every phase, and beyond, and investing in robust data capabilities.

As countries continue to face challenges related to market access barriers, administrative burden, lack of transparency, and low competition, digital tools can play a central role. They can reduce transaction costs, enhance transparency, improve access to procurement opportunities - including for foreign firms - and ultimately support more competitive and efficient procurement outcomes. Digital technologies can be leveraged by both the public sector and companies to overcome some challenges related to access to public procurement.

References

[4] OECD (2025), Implementing the OECD Recommendation on Public Procurement in OECD and Partner Countries: 2020-2024 Report, OECD Public Governance Reviews, OECD Publishing, Paris, https://doi.org/10.1787/02a46a58-en.

[1] OECD (2024), OECD Economic Outlook, Volume 2024 Issue 1: An unfolding recovery, OECD Publishing, Paris, https://doi.org/10.1787/69a0c310-en.

[2] OECD (2017), “OECD taxonomy of measures affecting trade in government procurement processes”, OECD Trade Policy Papers, No. 198, OECD Publishing, Paris, https://doi.org/10.1787/5bfb44c3-en.

[3] OECD (2015), Recommendation of the Council on Public Procurement, https://legalinstruments.oecd.org/en/instruments/OECD-LEGAL-0411 (accessed on 14 June 2025).

[5] OECD (n.d.), “Digital transformation _ OECD”.