Complementing private investment with public investment

Supporting private investment with government funds
Supplementing private investment

Description

Complementing private investment with public investment involves targeted government spending to stimulate, support, or de-risk private sector initiatives. This strategy addresses market failures, infrastructure gaps, and underinvestment in critical sectors by leveraging public funds to attract and enhance private capital flows. Practical actions include co-financing projects, providing guarantees, and developing enabling infrastructure, thereby accelerating economic development, fostering innovation, and ensuring balanced growth where private investment alone is insufficient or too risky.

Claim

Public investment should complement and support, rather than compete with, private investment. Governments need not spend scarce, costly resources on activities that the private sector can do better. For example, they need not try to produce or market most agricultural and industrial goods, nor to provide services such as urban bus transport.