Making Public Investment More Efficient

Policy Papers, May 1, 2015

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Making Public Investment More Efficient

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Bibliographic details

• Published: May 1, 2015
• Series: Policy Papers

Overview

• Public investment supports the delivery of key public services, connects citizens and firms to economic opportunities, and can serve as an important catalyst for economic growth.
• After three decades of decline, public investment has begun to recover as a share of GDP in emerging markets (EMs) and low income developing countries (LIDCs), but remains at historic lows in advanced economies (AEs).
• The increase in public investment in EMs and LIDCs has led to some convergence between richer and poorer countries in the quality of and access to social infrastructure (e.g., schools and hospitals), and, to a lesser extent, economic infrastructure (e.g., roads and electricity).

Key findings and metrics

• Comparing the value of public capital (input) and measures of infrastructure coverage and quality (output) across countries reveals average inefficiencies in public investment processes of around 30 percent.
• The economic dividends from closing this efficiency gap are substantial: the most efficient public investors get twice the growth “bang” for their public investment “buck” than the least efficient.

Implications for policy and practice

• Improving the efficiency of public investment processes is critical to enhance the economic and social impact of public investment.
• Closing the roughly 30 percent efficiency gap could materially increase the growth returns to public investment, given the observed twofold difference in growth outcomes between most and least efficient public investors.

Publication and subject metadata

• Publication title: Making Public Investment More Efficient
• Publication date: May 1, 2015
• Subjects: Capital, Economic growth, Emerging markets, Infrastructure, Low-income developing countries, Public investment, Public-private sector cooperation

Source: Making Public Investment More Efficient (International Monetary Fund).

Content in this bundle

• Making Public Investment More Efficient; IMF Policy Paper, June 11, 2015
  • Making Public Investment More Efficient; IMF Policy Paper, June 11, 2015 (Markdown version)
  • Making Public Investment More Efficient; IMF Policy Paper, June 11, 2015 (PDF)