Summary, Initial Observations, and Getting to a Tentative Theory of Public Investment Behavior

Introduction

In addition to describing how public capital management and budgeting is practiced in different countries, another purpose of this book is to propose a tentative theory of public investment to add to the public finance literature. The previous chapters describe public capital management and budgeting practices in twelve case study countries. An understanding of the differences in public capital budgeting and management practices across the twelve countries should provide a foundation toward theory building in public capital management to explain factors that contribute to variations in public capital management. The individual country case studies presented in this book suggest that capital management and budgeting practices vary regardless of geographical location and government regimes.

This chapter evaluates the twelve countries’ capital management practices according to the systematic public capital management and budgeting process described in Chapter 1. The chapter then characterizes and classifies the management practices of the twelve countries based on the editors’ evaluation using the case study descriptions. Finally, based on existing frameworks and theories from public finance and entrepreneurial finance (such as information asymmetry, expected utility, transaction cost, prospect theory and investment bias) the chapter proposes a tentative theory of the factors driving different practices across the case study countries.

Note that the tentative theory proposed in this chapter is just a starting point in developing public capital management theory at the international level. This proposed theory needs a larger sample of countries to improve its descriptive and predictive capacity. Despite the important roles of public infrastructure on a country’s economic growth, less is known regarding the causes of different capital management practices in providing and arranging public infrastructure systems. Thus, we hope that this book will inspire comparative public administration and international development theorists to build a stronger knowledge base.