The use of government purchasing power in industrial policies: a comparison between Brazil and Japan

Abstract This article examines the policy implemented in 2010 by the Brazilian government that offers margins of preference in public bids to firms manufacturing their products or engaged in R&D activities in the country. It discusses how the Japanese government used public procurement as a tool to promote the growth of domestic firms before the country became a member of the WTO in 1995. This study argues that, while the Japanese approach adopted before 1995 was efficient for creating more significant partnerships between the government and key domestic firms to achieve industrial policy objectives in strategic sectors, the recently implemented Brazilian policy has the advantage of being more accountable and transparent.