MICRO BUSINESS IN PUBLIC PROCUREMENT: DEPENDENCE ON REGIONAL DEVELOPMENT

In the world practice, the small and medium businesses (SMEs) are regarded as the backbone of the economy as they have great potential for employment, economic development and innovation. Democratization and development of market economy along with widespread of modern information and communication technologies have opened up opportunities for SMEs to participate in public procurement. The purpose of this paper is to analyze the behavior of private entrepreneurs as typical representatives of micro business in the public procurement system in Ukraine in terms of their territorial affiliation and activity. The indicators of number of tenders, its expected value, savings, average number of participants and number of unique participants were used as parameters of private entrepreneurs' activity in public procurement, and the indicators of population and gross regional product were applied to estimate the level of regional development. Correlation analysis was used to study the strength of relationship between the considered parameters. Its results on various procurement procedures are as follows (according to the Chaddock's scale): (1) in sub-threshold procurement we found the high correlation between studied indicators (except the parameter of average number of participants); (2) for the contract reporting – the high correlation between level of regional indicators and all parameters of private entrepreneurs' activity in public procurement; (3) for open tenders – the high dependence of private entrepreneurs' activity (with the exception of average number of participants' parameter) and regional parameters; (4) for open tenders with English-language publication – the high correlation only between number of tenders and regional indicators; (5) for negotiation procedures – the high correlation between all parameters of private entrepreneurs' activity in public procurement and level of gross regional product and moderate correlation with population size; (6) for negotiation procedures for defense needs – the high correlation between number of tenders, number of unique participants and population size, and moderate correlation with gross regional product level; (7) for negotiation procedures on urgent needs – the high correlation between all indicators of private entrepreneurs' activity and gross regional product level and moderate correlation with population size. Thus, we proved the strong positive correlation between private entrepreneurs' activity in all types of public procurement procedures for almost all indicators and the level of their regional development. The results of this study can be useful for regional development and influence decision making by regional authorities and/or central government.