Rationale for Public Sector Intervention in the Economy

This paper on the Rationale for Public Sector Intervention in the Economy was produced by the Greater London Authority (GLA) Economics team within the London Development Agency (LDA) to give a clear articulation of principles which underpin our investment policies.

It gives a clear explanation, accessible to those with a limited understanding of economics, of the reasons why the public sector may intervene in the economy to promote economic development.

The case study examples, which draw on issues facing London and interventions made by the LDA and Greater London Authority (GLA), help to illustrate the effects and the implications of market failures. The paper also illustrates some of the difficulties and risks of intervention.

The primary audience for the report are those within the LDA and GLA although the principles set out in the paper are equally relevant to other public bodies.