Impact of Financing Public Welfare Projects by Private Sector on the Economic Growth of Country

Abstract

This research discusses the reasons for reluctance by the private sector in financing projects for public welfare, the impact of their participation in such projects in the economic growth and ways to identify and minimize risks inherent in the same. This paper is thoroughly qualitative. Related literature is reviewed in detail, and findings are based on the theoretical analysis of the evaluated literature. The results of the study suggest that the involvement of private sector in public welfare projects seems to be in higher interest for developing nations where the revenues from government sources are not sufficient to finance the massive, risky and time taking projects. Lowest rate of project finance in developing nations is mainly assumed to be the cause of reduced investments in this area. This scenario provided an opportunity for the private sector to extend its participation in these projects as well.  However, the prime objective of the private sector is earning and maximizing profits rather than working for the welfare of the public and society. It is the primary concern if it turns to project financing that is being developed and implemented primarily with the goal of public welfare rather than profit motivation. However, if private investors move towards financing these types of projects along with adopting risk mitigation strategies and support from the government is also enhanced through policy reforms then these will turn into enhancing the GDP, standard of living and overall growth of the economy.