Public Investment Management Challenges and Tools
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on the order of US$1.2–1.5 trillion per year in 2015, or 5–6 percent of GDP, and closer to 15 percent in poorer countries.18 Sub-Saharan Africa will require almost US$98 billion per year, and almost half of that gap is unfunded even in the face of a series of first-order measures (Foster and Briceño-Garmendia 2010). Technological change and associated national competitiveness pressures, as well as growing concerns about climate change and adaptation, are posing new challenges for public and private sectors alike. Under the banner of “spending for the future” and “investing to invest,” policy makers at the country and global levels are increasingly emphasizing the need to strengthen institutional arrangements associated with investment to improve their countries’ productive capital stock and to leverage scarce financial resources. Public investment efficiency is influenced by a range of government fiscal and regulatory actions, as well as a diversity of other factors, as highlighted earlier. Moving from left to right, figure 3.5 sets out a basic framework to capture the various modalities of public investment financing, implementation, and outcomes. In practice, the performance of these modalities will shape results in terms of both public capital assets and the liabilities and risks associated with them. The prevailing and prospective importance of each modality in generating particular types of public capital assets may vary significantly across Figure 3.5 Public Investment Modalities
fiscal financing financial sector role some fiscal and some corporate financing other sources of financing
general goverment sector (central state, local)
mainly fiscal
public investment management
public corporations (nonfinancial)
PPPs private sector
private investment
Source: Authors. Note: PPP = public-private partnership.
examples • power • roads • telecommunications/ internet • schools • clinics/hospitals • stadiums • “green” infrastucture; adaptation
mainly regulatory