Promoting public procurement for micro, small and medium-sized enterprises’ growth and transition to formality: Lessons learned from Chile and the Republic of Korea

Available data show that public procurement represents, on average, between 13 per cent and 20 per cent of GDP across countries. While considerable public expenditure in public procurement as part of public investment has the capacity to break the vicious cycle of poor growth and informality, not all public procurement systems are designed and implemented with the promotion of MSMEs’ growth and transition to formality in mind.

This report investigates the various elements that shape an integrated public procurement system and how they influence the inclusion of MSMEs and their formalization into a public procurement process. The cases of Chile and the Republic of Korea are used as examples of good practices because their public procurement systems have shown comprehensiveness, innovation and good use of new technology to establish e-procurement. This report concludes with lessons learned from the two countries and provides recommendations for countries exploring innovation in the design and implementation of public procurement systems that can support MSMEs’ growth and the transition to formality.