Data on public investment worldwide shows an increasing "investment gap" between investment needs and actual investment activity. The aim of the study "Public Investment Management in Developing Countries: Experiences and Recommendations for German Development Cooperation" is to identify entry points and proposals for how the German development cooperation (GDC) can help partner countries expand and better manage investment activity that also takes into account the growing needs in terms of climate change and social cohesion.
Public investment is a key determinant of economic, social, and environmental development. There is consensus on this among the G20 countries, and it is regularly supported by the results of scientific research and studies by the OECD, the United Nations, the World Bank and the International Monetary Fund (IMF). Another area of consensus in the scientific literature and the development policy debate concerns the observation that there is a considerable backlog of public investment – especially, but not only – in developing and transitional countries, which limits the opportunities for economic, social, and ecological development. At the same time, according to IMF estimates, the benefits from realised investment projects worldwide are about 30% less than what is technically possible, mainly due to inefficiencies in planning, funding, and implementation.
Against the backdrop of the high investment demand worldwide, the IMF has developed an analytical tool to analyse the strengths and deficits of individual countries in the decision-making and realisation of public investments – the Public Investment Management Assessment (PIMA) framework. Based on 15 dimensions, the decision-making and management processes are analysed and evaluated from the perspective of government financing.
The study develops an advisory approach for German technical cooperation based on the international discussion, the IMF’s PIMAs and the practical experience of GDC. The approach shall strengthen public investment in partner countries of GDC. Specifically, the aim is to support an improvement of public investment management in order to make better use of existing sources of financing. At the same time, the aim is to improve decision-making and management processes for public investments in partner countries by applying the criteria of poverty orientation, gender, and environmental compatibility. To this end, advisory approaches for ministries of finance, ministries for economic planning, sector ministries (environment, health, education), supreme audit institutions and civil-society organisations are identified and concretised.
Drawing on the results of this study, WINS Global Consult has developed two in-depth trainings on Public Investment Management for GDC: one on policy and strategy, the other for subnational governments. Details on both trainings can be found in the underlying concepts.