Providing public funding

Governments plan their public investment programmes by jointly considering both their overall priorities for the economy and the appropriate division of responsibility between public and private activities. Intersectoral priorities depend on economic structure, natural resource endowment and development strategy. No clear techniques exist to guide intersectoral choices, although identifying bottlenecks in an economy and comparing rates of return to different activities may provide some clues. Intersectoral spending allocations are inevitably based largely on intuitive judgments, recognizing the need for overall balance between sectors. The priority areas of public sector involvement are education, health, urban services and rural infrastructure. Both primary education and preventive health care provide broad benefits to society in addition to those received by the direct beneficiaries and would tend to be under-supplied without government involvement.