Mazzucato, Mariana; Spanó, Eduardo; Wainwright, Dan; (2025) Rethinking the Economics of Public Procurement: Towards a mission-oriented approach. (UCL Institute for Innovation and Public Purpose (IIPP) Working Paper ). UCL Institute for Innovation and Public Purpose (IIPP): London, UK.

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Abstract

Public procurement is a key tool for mission-oriented innovation policies. It has been relevant in industrial policy, but underused as a tool for shaping markets to tackle social and ecological challenges. This paper argues for a new economic theory to understand and guide public procurement as a strategic tool to shape markets. Current procurement theories – public procurement for innovation and sustainable public procurement – are limited because they consider social value as a secondary goal, lack strategic coherence and usually rely on static quantitative evaluations. A bold new economics of procurement incorporates value as directional rather than diffuse, is assessed dynamically (over time) rather than statically (at a point in time), and is co-created rather than individually created, all of which results in a risk-taking public sector rather than the private sector alone taking risks. This change could unlock the potential of public procurement to catalyse innovation and investment aligned with tackling social and ecological challenges.

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