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Public Procurement as an Instrument of Support for Industrial Enterprises after the 2008–2009 Financial Crisis
The main objective of the study is to assess the effects of the government’s purchases on firm dynamics after the 2008 – 2009 financial crisis. Using the survey database of the 1950 Russian manufacturing firms combined with the publicly available financial data, we shall also examine the impact of public procurement contracts as an instrument used by the State for indirect support combined with traditional measures for direct support. First of all, we suggest that the precise impact will depend on the internal characteristics of the enterprise (size, age, ownership structure). In particular, the positive effect is more likely to be observed in small organizations, since those will begin investing in new technologies and human capital and improving their reputation. Given the assumption for the “system of exchanges” between the State and business, we could also expect that for the firms which have systematically assisted the authorities, as well as members of business associations, this positive effect will be weaker. On the other hand, in the model of «state capture», we won’t get any positive effect of government purchases. Moreover, we strongly believe that the effect will be positively associated with the quality of the institutional environment in the region.