The "Public Sector" has always been questioned, mainly in underdeveloped and developing countries. As it generally has a large and complex infrastructure, and each country has different schemes, people generally do not understand how it works or how money is invested, so they tend to distrust it. Carlos Mas, former president of the PwC Spain company, believes that “to get the public sector to transform and play the part that corresponds, political will, vision and consensus are needed. However, it is equally necessary that the political sphere take its place and does not mix inappropriately with the administrative sphere ”. He also established that Public Administrations serve “so that citizens can live as such, so that society functions properly and to have instruments and resources that allow individuals to live fairly and safely”.
Within each society, there are more liberal groups than others, and I believe that the position of reducing the Public Sector in some countries may be valid, but, have you ever wondered or imagined what would happen if the political and legal organization of a nation vanishes in its whole? That is why despite personal opinions, it is important to investigate this subject and then be able to give an opinion with consistency. Some people claim the amount of money their country invests in the Public Sector, unaware of whether or not it is necessary and in what areas they do it exactly. On the other hand, it should be considered that some other groups or societies regret the opposite: the lack of presence of the State, which is the one that should protect citizens.
The IDB has recognized itself as "the main source of multilateral financing in Latin America" that "provides solutions to the challenges of development and support in key areas of the region." The Sector of Institutions for Development dependent on this entity presented an interesting study entitled “Public investment spending in Latin America” in which they analyze the situation of some countries that provided information on the subject - that is the reason why Others do not appear.
Public Investment
The country that invests most is Bolivia, with an investment of approximately 7.77% of its Gross Domestic Product. Ecuador (6.41% of GDP), Nicaragua (5.07%) and Colombia (4.48%) are the countries that follow the nation chaired by Jeanine Áñez. On the other hand, Uruguay (1.46%), Brazil (1.64%) and Costa Rica (1.90%) have the least public investment.
Investment between these countries has reached the same levels as some of the most developed in Europe. The difference is that those in the latter category, in addition to being rich and possessing more resources, achieved their highest levels of investment in the initial stages of their economic development.
Since 2007, the amount of Public Investment in Latin America has increased significantly, and in 2016 the amount of money invested was approximately USD 92,000,000, 3.54% of its Gross Domestic Product. The following graph shows the fluctuation of public investment in the region since the '00s.
Institutional classification
Subnational governments have increasing responsibility in the public sector spending (thanks to the decentralization process), followed by local governments and public entities. Regional governments are the least invested.
This situation differs between centralized and decentralized countries. Here you can see two graphs: one from Peru, a decentralized country, and the other from Paraguay, a centralized country.
Both are net exporters of raw materials in South America. The central government of Paraguay concentrates 71.6% of the total investment, while in Peru subnational governments concentrate 60% (LG 39.9% and RG 20.3%).
In Latin America, central governments invest 58.29% of total investments, followed by local governments with 16.27%, public entities (15.11%) and regional governments (9.92%).
Functional classification
Latin American countries invest more in public transport (29.56% of total investment), housing (18.4%), education (9.06%) and health (7.39%).
Subnational governments have increasing responsibility in the public sector spending (thanks to the decentralization process), followed by local governments and public entities. Regional governments are the least invested.
This situation differs between centralized and decentralized countries. Here you can see two graphs: one from Peru, a decentralized country, and the other from Paraguay, a centralized country.
Both are net exporters of raw materials in South America. The central government of Paraguay concentrates 71.6% of the total investment, while in Peru subnational governments concentrate 60% (LG 39.9% and RG 20.3%).
In Latin America, central governments invest 58.29% of total investments, followed by local governments with 16.27%, public entities (15.11%) and regional governments (9.92%).
Functional classification
Latin American countries invest more in public transport (29.56% of total investment), housing (18.4%), education (9.06%) and health (7.39%).
- Priorities among Latin American countries vary. These variations are logical since each country has different political, social and economic situations.
- Panama decides to contribute more money to public transport, housing, and community services.
- Peru invests in public transport, followed by the education sector and housing or community services in third place.
- Mexico spends a large amount of money on housing, community services, and transportation.
- Paraguay gives priority to housing, community services, social protection and then health.
- It is important to highlight that there are some countries such as Peru (in the aspects of education, housing, and community service) and Paraguay (in the area of social protection), that delegated responsibility for public investment from central to subnational governments "with the idea to decentralize to "attract these services" to citizens".
The State presence and public investment are two indivisible concepts to my knowledge. The division or the crack that exists between liberals and progressives is currently simpler than we believe. The reason why there are people who claim more or less state presence is often linked to the type of government that a country owns, and to the territory in which a particular sector of the society lives. In other words, to the unequal distribution of wealth.
In most cases, liberals live in big cities, while those with a more progressive trend are in less urbanized regions. This happens because the State - although some of them self-proclaim as federalist- usually invests more money in the more developed areas, and tends to reduce its public spending in rural areas. Thus, in the same country, the different sectors have different perceptions and experiences respect to the investment of their government.
Comparisons between countries are not always productive, because the situation among the sectors differs. I believe that - without ignoring the shortcomings that exist in the Public Administration due to erroneous management - before questioning the state investment, we must know it in depth.
By Micaela Seidman
Micaela Seidman is a 21-year-old-student from Buenos Aires, Argentina who is currently studying a Law Degree at the University of San Isidro. She is working at the Buenos Aires City Government. She is the CEO and Founder of
