The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Public Sector Investment Efficiency in Developing Countries

  • Alvar KangurEmail author
  • Chris Papageorgiou
Reference work entry


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. We 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.


Public Investment Marginal Product of Capital Capital Stock Government Inefficiencies 

JEL Classification

O19 O23 O47 
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Papageorgiou acknowledges financial support from the U.K.’s Department for International Development (DFID).


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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  1. 1.International Monetary FundWashingtonUSA

Section editors and affiliations

  • Jonathan Temple

There are no affiliations available