7 reasons, why public investments are necessary for the economy

Waste management Energy supply Education Healthcare and social affairs Mobility Water supply and wastewater disposal Housing Digitalization

Public investments in services of general interest are primarily investments in infrastructure. This includes, for example, the construction and maintenance of roads and transportation networks, digital networks, energy supply, water pipes and sewage systems, hospitals, housing and educational facilities and many more.

PUBLIC INVESTMENTS ...

... INCREASE 1. PRODUCTIVITY

The economic performance and productivity of private companies depend to a large extent on local conditions, i.e. the business location. Good conditions for businesses are created through public investments and the associated services. For example, a company benefits if the public hand invests in the local power supply system, so that it gets even more reliable, or by public investments in the public transport, so that the public transport network gets extended, thus helping the company saving time and potentially incurring costs.

... INCREASE 2. THE ATTRACTIVENESS OF THE BUSINESS LOCATION

The better a region’s local infrastructure is developed, the more attractive it is for companies to do business in said region and move their company to that region. This in turn attracts even more companies. A highly developed and dense local infrastructure therefore is an extra incentive for businesses to locate to said region and do business there, thus improving the local economy.

... LEAD TO 3. PRIVATE INVESTMENTS FOLLOWING

Public and private investments go hand in hand. Public investments in infrastructure do not replace private investments at all, as is often wrongly assumed. Quite the contrary is the case, public investments attract private investments and lead to an increase in productivity.

... PROMOTE 4. INNOVATIONS

The private business sector has enormous potential for innovation. However, if the prospects of making profit by developing a new innovative product or in a new industry as a whole are still low, it is public investment, that convinces private businesses to take the risk. Therefore, public spending acts as an incentive for businesses coming up with new technologies and goods.

... CREATE 5. VALUES

Investments by the public sector are often carelessly labelled as nothing but "debt creation". However, public investments create enormous, long-term social value, lasting for generations. In addition to that, public investments provide a double benefit: Improvements in the quality of life for citizens on the one hand, a boost for the local economy on the other hand.

... CREATE 6. JOBS

Public investment is crucial for the high level of employment in Austria compared to other countries. Spending by Austrian municipalities secures and creates several hundred thousand full-time jobs. Vienna's spending alone leads to around a quarter of a million full-time job, which would not exist without that public spending.

... CREATE 7. ADDED VALUE

Municipal spending has an extremely positive impact on a local economy’s added value. For example, municipal spending in Austria leads to dozens of billion euros added value every year, with Vienna alone adding around 20 billion euros.

Public services do not only ensure, that services of general interest are delivered for the good of the customers, the infrastructure maintained by the public sector and services, associated with it, also benefits the local economy and its companies by providing essential services to them.

Study Remunicipalisation in Europe (2019)

Factsheet 7 reasons why public investment is necessary for the economy (ÖGPP)