Successful Transitions from Public to Private-Sector Led Growth: Lessons for Benin

December 3, 2021

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Aissatou Diallo. Successful Transitions from Public to Private-Sector Led Growth: Lessons for Benin, (USA: International Monetary Fund, 2021) accessed December 3, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Many Sub-Saharan African (SSA) countries, like Benin, have scaled up public investment during the last decade. Such a strategy contributed to the improvement of infrastructure, but also to a build-up of debt vulnerabilities. Looking forward, the planned fiscal consolidation will result in some restraint of public spending, and, in particular, public investment. In this context, maintaining or even raising the region’s economic growth will require an offset by the private sector. The analysis draws lessons from countries that have successfully transitioned from public investment to private investment-led growth using a global sample starting in the mid-1980s. These lessons highlight policies that have been crucial in fostering a rebound of private investment in the wake of a contraction of public investment. The analytical framework proposed by Hausman, Rodrik and Velasco (2005) is used to identify and classify such policies. Finally, the paper analyses how the identified policies could help Benin achieving a smooth transition from public to private sector-led growth.

Subject: Expenditure, Fiscal consolidation, Fiscal policy, Infrastructure, National accounts, Private investment, Public debt, Public investment spending

Keywords: Expansionary fiscal consolidation literature, Fiscal consolidation, Fiscal consolidation, Global, Growth, Identified policy, Infrastructure, Investment scaling-up, Investment-led growth, Lessons, Private and public investment, Private investment, Public investment spending, Scaling-up program, Sub-Saharan Africa, Transition

Publication Details

Pages:

28
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2021/286
Stock No:

WPIEA2021286
ISBN:

9781589068544
ISSN:

1018-5941

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