▁invest ment ▁capital ▁in ▁the ▁financial ▁mark ets ▁when ▁such ▁local ▁mark ets ▁exist ▁and ▁are ▁suit ably ▁liquid . ▁While ▁interest ▁rates ▁for ▁private ▁companies ▁are ▁often ▁higher ▁than ▁for ▁government ▁deb t , ▁this ▁can ▁serve ▁as ▁a ▁useful ▁constraint ▁to ▁promote ▁efficient ▁invest ments ▁by ▁private ▁companies , ▁instead ▁of ▁cross - sub s id izing ▁them ▁with ▁the ▁overall ▁credit - ris k ▁of ▁the ▁country . ▁In vest ment ▁dec isions ▁are ▁then ▁govern ed ▁by ▁market ▁interest ▁rates . ▁State - owned ▁indust ries ▁have ▁to ▁comp ete ▁with ▁dem ands ▁from ▁other ▁government ▁depart ments ▁and ▁special ▁interests . ▁In ▁either ▁case , ▁for ▁smaller ▁mark ets , ▁political ▁risk ▁may ▁add ▁substantial ly ▁to ▁the ▁cost ▁of ▁capital . ▁ ▁Security : ▁govern ments ▁have ▁had ▁the ▁t endency ▁to ▁" b ail ▁out " ▁poor ly ▁run ▁business es , ▁often ▁due ▁to ▁the ▁sens itivity ▁of ▁job ▁losses , ▁when ▁econom ically , ▁it ▁may ▁be ▁better ▁to ▁let ▁the ▁business ▁fol d . ▁ ▁L ack ▁of ▁market ▁discipline : ▁poor ly ▁managed ▁state ▁companies ▁are ▁ins ulated ▁from ▁the ▁same ▁discipline ▁as ▁private ▁companies , ▁which ▁could ▁go ▁bank rupt , ▁have ▁their ▁management ▁removed , ▁or ▁be ▁taken ▁over ▁by ▁compet itors . ▁Private ▁companies ▁are ▁also ▁able ▁to ▁take ▁greater ▁ris ks ▁and ▁then ▁seek ▁bank rupt cy ▁protection ▁against ▁credit ors ▁if ▁those ▁ris ks ▁turn ▁s our . ▁ ▁Natural ▁mon opol ies : ▁the ▁existence ▁of