Page 103 - Revista del Centro de Investigación y Desarrollo del INEI - Economía, Sociedad y Estadística N° 9

D. Government investment spending

Government investment creates public infrastructure
essential for long-term economic growth and societal
wellbeing. For instance, public investment supports
the provision of public services (e.g. schools). Further,
governments invest in transport infrastructure and
other large-scale projects to improve productivity and
competitiveness. Finally, governments can also invest
in research and development, which can contribute
in spreading new tools and knowledge for increasing
productivity and creating jobs in sectors adding high
value to the economy.
Similarly, Paraguay began an accelerated process of
In 2017, government investment represented, on infrastructure improvement in 2013, to update and
average, 4.6% of total government expenditure in LAC improve its road network and to complete hydraulic
countries with available data. This figure is smaller than installations that will improve water quality and
in OECD countries where it was 7.7% in the same year. sanitation.
Government investment in the LAC region is extremely
heterogeneous. On the high end, investment as a Investment can have higher economic returns in regions
percentage of government spending is 18.5% in Peru with a relatively lower level of development. Investment
and 15.8% in Paraguay. Between 2007 and 2017, these spending across levels of government is crucial for
are the two countries where investment increased the securing long-term growth and reducing inequality.
most, 3.4 and 3.2 p.p. respectively. As part of its national For LAC countries with available information, 35.2%
development strategy (i.e. the “Bicentenary Plan: of government investment spending took place at the
Peru 2021”) issued in 2010 the Peruvian government local level in 2017 compared to 29% in OECD countries.
set ambitious targets in terms of public investment, For LAC countries, this represents an increase of 5.4
particularly in the transport sector as means of closing p.p. since 2007, notably in Colombia and Peru local
gaps with other countries in the region, improving governments carried out over 40% of total investment
people’s well-being and fostering economic growth. in 2017.
2.9. GOVERNMENT INVESTMENT SPENDING
FIGURE 3: GOVERNMENT INVESTMENT AS A PERCENTAGE OF TOTAL GOVERNMENT
EXPENDITURES, 2007 AND 2017
2.20. Government investment as a percentage of total government expenditures, 2007 and 2017

% 2007 2017
20
18
16
14
12
10
8
6
4
2
0
PER PRY HND CHL SLV COL MEX BRA LAC OECD
Source: Data for the LAC countries: imF Government Finance Statistics (imF GFS) database. Data for the OECD average: OECD national Accounts
Source: Data for the LAC countries: IMF Government Finance Statistics (IMF GFS) database. Data for the OECD average: OECD National Accounts Statistics (database).
Statistics (database).

12 https://doi.org/10.1787/888934091486
Statlink https://doi.org/10.1787/888934091486
2.21. Government investment as a percentage of GDP, 2007 and 2017
% 2007 2017
5
4
4
3 103
3
2
2
1
1
0
PER PRY HND COL CHL SLV MEX BRA LAC OECD
Source: Data for the LAC countries: imF Government Finance Statistics (imF GFS) database. Data for the OECD average: OECD national Accounts
Statistics (database).
12 https://doi.org/10.1787/888934091505
2.22. Distribution of investment spending across levels of government, 2007 and 2017

% Central Government State Government Local Government Social security funds
100
90
80
70
60
50
40
30
20
10
0
2007 2017 2007 2017 2007 2017 2007 2017 2007 2017 2007 2017 2007 2017 2007 2017 2007 2017 2007 2017

CHL PRY HND SLV COL PER MEX BRA LAC OECD
Source: Data for the LAC countries: imF Government Finance Statistics (imF GFS) database. Data for the OECD average: OECD national Accounts
Statistics (database).
12 https://doi.org/10.1787/888934091524

GOvErnmEnt At A GLAnCE: LAtin AmEriCA AnD thE CAribbEAn 2020 © OECD 2020 69