Public goods provision in developing countries: a research agenda for New Institutional Economics

Government provision of public goods – especially in poor and developing country contexts – can address market failures and protect citizens’ welfare. However, public goods provision is challenging in low-income economies, where lower levels of education, less developed transportation systems, and less access to technology can erode the incentives and capacity of government to deliver. Weak mechanisms of accountability may exacerbate these problems. This chapter raises two interlinked issues – related to existing political institutions, and to new technologies – influencing public goods provision in developing countries, for which unanswered yet important questions abound. The first concerns remarkable gaps in our understanding of how developing country political institutions, and interactions among institutions, inform the allocation of public funds. The second concerns how the technology-driven information revolution currently taking place is likely to directly change public goods provision in developing countries, as well as change political and other institutions that mold incentives for public investments.