In this Schuman Short, Research Fellow Rohit Ticku points at low levels of investment by the private sector as one of the factors that obstruct growth in developing countries. Since the demand for the output is very uncertain, firms are often unwilling to make costly investments.
Rohit Ticku explains that under these conditions, the government can be an important source of stable demand for the private sector. Nevertheless, this does not necessarily imply a help to increase private sector investment if the 'crowding out' phenomena takes place:
"Government spending however can also be counter-productive if it ‘crowds out’ private sector spending and investment. By ‘crowding out’ it is then meant the phenomena where government spending discourages private spending and investment."
Check this related working paper describing the impact of participation in public procurement on firm performance in Uganda.
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