A Primer on Public Investment in Europe

Many aspects of public investment are surprisingly poorly understood, at least in the European context. To start with, there is often confusion about what public investment means in the first place, as much of the economic literature employs the terms “public investment” and “infrastructure investment” interchangeably. A great deal of public investment is not infrastructure investment, and a great deal of infrastructure investment is not public. As we will deal with the composition of public investment below, some examples of non-public infrastructure investment should suffice here. They include investment by energy companies in generation capacity; telecom companies in networks; or rail companies in rolling stock or rail track. In all these cases commercial enterprises finance these investments, which are recorded as investment of the enterprise sector in national accounts statistics—regardless of the ownership structure of the enterprises. Only investment directly financed from the budget of the government—at the central or sub-national level—qualifies as public investment.