Economic crisis and protectionism within EU: does higher unemployment lower foreign penetration in Public Procurement?

Public procurement is a crucial pillar of economic tools range for governments. Because of the significant volume of spending, it may represent a strategic instrument to intervene directly in the real economy and achieve pressing policy goals. In this paper I test the hypothesis that governments have a strategic incentive to increase protectionism in public procurements in periods of high unemployment and low GDP. The analysis is conducted across 240 European regions during the period 2010-2016. Starting from national public procurement databases, an ex-novo dataset is built by calculating the import penetration index as percentage of tenders won by foreign firms for each territorial unit (NUTS 2 level) in every single year. Different estimation methodologies, from a simple regression to a logarithmic model with fixed effects, are applied to compute the correlation between variables. The results show that while GDP has a statistically non-significant impact on public procurement market, the unemployment rate has an interesting negative effect on foreign penetration in regional tenders.