Government Purchases and Firm Growth: Evidence from South Korea's Public Procurement Market

Public procurement accounts for a substantial portion of the taxpayers' money: approximately 12% of GDP and 29% of government expenditure in OECD countries. Governments are expected to carry it out efficiently and with high standards of conduct to ensure sustainable growth. In this talk, Lee will explain the unique auction system in South Korea's public procurement market, and discuss how government purchases can lead firms and the economy to grow. Firms that obtain short term public procurement contracts experience increased growth and activity, above the effects of the activity associated with the public contract, and this is observed especially among small, young and financially-constrained firms. Lee will also draw policy implications from those findings.

Munseob Lee is an assistant professor of economics at the UC San Diego School of Global Policy and Strategy. He is also a core faculty member at the UC San Diego Transnational Korean Studies. His research focuses on macroeconomics, firm dynamics, and Korea. Prior to joining UC San Diego, Professor Lee was a visiting scholar at the Federal Reserve Bank of St. Louis, a research intern at the International Monetary Fund, and a sergeant in the Republic of Korea Army.