Events

Prof. Claudio Ferraz
Professor of Economics
University of British Columbia and PUC-Rio
Scientific Co-Director J-PAL Latin America

We study the role of demand constraints in limiting the growth of small and medium
firms in Brazil. We find that demand shocks in the context of public procurement can
help alleviate constraints to firm growth and lead to higher employment, sales, and
value-added of retail firms. The effects of winning government contracts persist well
beyond the length of the contracts and do not crowd out private sales. We do not find
evidence that firms become dependent on government contracts to sustain their growth.
Instead, our results suggest that higher investment, inventories, and spending on advertisement
explain the persistent effects.