## Successful Transitions from Public to Private-Sector Led Growth: Lessons for Benin

_IMF Working Papers, December 3, 2021_

## Source details

**Canonical URL:** [Successful Transitions from Public to Private-Sector Led Growth: Lessons for Benin](https://www.imf.org/en/publications/wp/issues/2021/12/03/successful-transitions-from-public-to-private-sector-led-growth-lessons-for-benin-510380)

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## Bibliographic details
- Authors: Aissatou Diallo
- Published: December 3, 2021
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781589068544.001

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### Executive summary
- Many Sub-Saharan African (SSA) countries, like Benin, have scaled up public investment during the last decade, contributing to infrastructure improvement and a build-up of debt vulnerabilities.
- Planned fiscal consolidation will restrain public spending, and, in particular, public investment.
- Maintaining or raising the region’s economic growth will require an offset by the private sector.
- The analysis draws lessons from countries that have successfully transitioned from public investment to private investment-led growth using a global sample starting in the mid-1980s.
- The analytical framework proposed by Hausman, Rodrik and Velasco (2005) is used to identify and classify policies that have been crucial in fostering a rebound of private investment following a contraction of public investment.
- The paper analyzes how the identified policies could help Benin achieve a smooth transition from public to private sector-led growth.

### Key findings
- Public investment scaling-up over the last decade improved infrastructure but contributed to debt vulnerabilities.
- Fiscal consolidation plans imply restraint in public spending and public investment going forward.
- A successful rebound of private investment is necessary to sustain or raise growth as public investment declines.
- Lessons are drawn from a global sample beginning in the mid-1980s of countries that successfully transitioned from public- to private-led investment growth.
- Identified lessons focus on policies that enabled private investment to rebound when public investment contracted.

### Analytical approach
- Empirical basis: global sample of countries starting in the mid-1980s.
- Conceptual framework: Hausman, Rodrik and Velasco (2005) analytical framework used to identify and classify the relevant policies for transition from public- to private-led growth.
- Application: the paper examines how the classified policies could be applied to Benin to support a smooth transition.

### Policy implications (as presented)
- Policy measures that can foster private investment rebound are identified and classified according to the Hausman, Rodrik and Velasco (2005) framework.
- The paper discusses how these identified policies could assist Benin in achieving a smooth shift to private sector-led growth in the context of fiscal consolidation.

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_Source: https://www.imf.org/en/publications/wp/issues/2021/12/03/successful-transitions-from-public-to-private-sector-led-growth-lessons-for-benin-510380_