Institutions and Prosperity: Public Institutions for Enabling the Private Sector

https://openknowledge.worldbank.org/entities/publication/4bddd50e-7b12-47a0-8f96-fc883ea62f95 A thriving private sector is the engine of economic growth and development, driving job creation, generating income, and spurring innovation. Yet, behind any flourishing private sector is a well-functioning public sector that fosters a strong business climate and provides public goods and services that support private investment. Weak public institutions can inhibit the private sector, constraining broader growth and development. Institutions and Prosperity: Public Institutions for Enabling the Private Sector examines private sector development through a critical but often-overlooked lens: the capacity of public institutions to effectively implement their policy mandates. Drawing on extensive evidence and data, this report provides a practical conceptual framework that can diagnose the complex challenges facing public institutions and identify pathways for addressing them, focusing on regulatory institutions and public procurement. The analysis underscores the need to understand how organizational and governance dimensions interact to determine public institutions’ capacity to implement policies effectively. The report also includes a discussion of corruption and passive waste in procurement and a case study on telecommunications regulatory institutions in Peru. Highlighting the role of the public sector in the private sector, Institutions and Prosperity serves as a call to action to improve institutional capacity and as a resource for policy makers seeking to strengthen how both sectors can work together to unlock growth and development.