Posted by Jason Harris
Increasing public investment is one of the more common pieces of advice given to countries over recent years, particularly in the presence of economic slack and low interest rates. In these conditions the short-term boost from increased demand adds to long-term benefits from increasing productive capacity.
But while increasing investment is relatively easy to recommend in aggregate terms and at the political level, when it comes to the nuts and bolts of project selection, approval and execution, problems abound. This is particularly so when premature commitments are made before a full project assessment has been done, resulting in cost blowouts and implementation delays.