Government Procurement and Technological Capability-Case of Indian Electrical Equipment Industry

Power generation and transmission is undertaken by state-controlled utilities in most countries. However, the required equipment is manufactured largely in the private sector. The procurement policy emphasises cost effectiveness and reliability of equipment. For firms in developing economies efforts towards greater cost effectiveness and reliability of equipment produced in the capital goods sector represent acquisition of greater technological capability. Using a composite measure of firm performance this article investigates with the help of an ordered probit model whether these technologically relevant attributes of the procurement policy have any bearing on firm performance.