There are numerous examples where public investment has been grossly mismanaged and where corruption has overwhelmed the entire process (unfinished roads, highways leading to nowhere, incomplete or unusable bridges and power generation projects). This entry aims at reviewing the existing literature on the potential impact of such public investment inefficiencies on productivity and output, in theoretical models and empirical exercises. The authors conclude that despite recent progress in assessing and incorporating such inefficiencies in economic analysis, the composition of public capital and its interlinkages with other factors of production and with structural economic conditions should remain a key area of future research.
This work is part of the Macroeconomics in Low-income countries’ programme
Kangur A., Papageorgiou C. (2017) Public Sector Investment Efficiency in Developing Countries. In: Palgrave Macmillan (eds) The New Palgrave Dictionary of Economics. Palgrave Macmillan, London
Public Sector Investment Efficiency in Developing Economies