Urban Competitiveness and Public Procurement for Innovation

Public procurement for innovation represents one of the least studied demand-side innovation policy tools that can be used to increase urban competitiveness. Evidence suggests that local and regional governments are becoming more involved in procuring innovative solutions, but overall knowledge remains limited regarding how they get involved and what effects this involvement has had. Based on a study of Nordic-Baltic Sea cities, the current study reveals that public procurement for innovative solutions has a positive impact on the providers and that urban authorities can act as market creators. The study also demonstrates that public procurement is not seen as an inherent part of innovation policy. A lack of awareness exists among city officials about the connection between procurement and innovation, and local authorities tend not to be willing to take risks when promoting innovation through public procurement. Due to the positive effects, however, further development of related policies is recommended.