Page 118 - Azerbaijan State University of Economics

THE PUBLIC INVESTMENTS IN AZERBAIJAN: THEORETICAL AND PRACTICAL ASPECTS

not quite desirable action [Joseph Eugene Stiglitz, 1997: 120]. In such

conditions the market subjects who are directed by the economic
interests have not any opportunities to get individual benefits by

production of public goods. For this reason the government is
responsible to investment at least into production of public goods. At the

same time decision making in case of public investments is based not on

financial efficiency, but on public one. In case the government invests in
the project with low financial return but high social efficiency, it

maintains and supports the social welfare of its population. Therefore
public investment into the social and institutional infrastructure, which

creates appropriate conditions for economic activity of government,

increases the competitiveness of national economy, serves to social
development of the population and leading realms of state’s economy.

On other hand the role of the government in the investment activity
depends on savings made in other activities, the level of infrastructure

provision, the level of development of realm providing infrastructure
services and etc. At the same time the investment activity of the

government may not be limited only by the investment into the

infrastructure. Thus in some cases due to lack of economic interest
particular projects with commercial nature can be undertaken by the

government in order to maintain stability in respective sectors.

Approaches to the concept of “public investments”

Before assessment of volume and role of public investments, it is
more important to identify their nature and concept. In Azerbaijan

different institutions have different approaches and definitions for public

investment. Thus State Statistical Committee uses the wording like

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