Linking Indigenous Communities with Regional Development by OECD

Author:OECD
Language: eng
Format: epub
Tags: development/industry/socialissues/regions
Publisher: OECD Publishing
Published: 2019-07-15T00:00:00+00:00

Figure 2.8. Public procurement as a percentage of GDP, select countries (2015)

Source: OECD (2017[85]), Government at a Glance - 2017 Edition: Public Procurement, https://stats.oecd.org/Index.aspx?QueryId=78413 (accessed on 24 January 2019).

StatLink https://doi.org/10.1787/888933959358

Preferential procurement policies for Indigenous businesses

Recently national and some subnational governments in OECD countries have adopted the policy of using government procurement contracts as a way to stimulate Indigenous business growth. McCrudden (2004[86]) provides a useful overview of the history of public procurement as a means to achieve social objectives. Procurement set-asides go beyond prohibitions on discrimination and employ various forms of “affirmative action” to accomplish social objectives and encourage entrepreneurship amongst minority groups (e.g. African Americans, Indigenous peoples, women and people with disabilities). Mandatory set-asides for federal contracts for Indigenous peoples (as direct contractors and as sub-contractors) is a practice that has been used by the Canadian Government since 1996. Evaluations of the effectiveness of various set-asides provide mixed results. A number of problems that reduce the effectiveness of these programmes have been identified in the literature (McMurtry, 2014[87]; Myers and Chan, 1996[88]; Noon, 2008[89]; Oakes, 2010[90]). This can include lack of experience in bidding for government contracts, difficulties in finding potential partners for subcontracts, lack of minority-owned firms in sectors such as construction and manufacturing, and the use of silent minority partners in the business ownership structure. These challenges can be summarised in terms of problems in the design of public procurement processes and barriers to the creation of minority firms that can take advantage of these opportunities (Box 2.8).

Each of these factors is likely to apply to Indigenous peoples living in rural areas. The first point is that procurement strategies are likely to be less effective in low-density economies due to the smaller number of contracts available, lack of scale and specialisation in the local economy, and the longer distances that are required to travel. For these schemes to work in rural regions, it is important that different levels of government have a shared commitment to preferential procurement and co-ordinate their actions. In particular, local municipalities are critical because of their role in terms of investment and maintenance of local infrastructure.

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