Asymmetric Information and Government Action
In many developing countries, government regulations and red tape impose high costs on those who officially register capital ownership. The dead capital problem that these government inefficiencies create reduces investment and growth. As a result, there is a negative relationship between the measures of government inefficiency and economic growth.
Propose at least three methods that governments should employ to reduce their exposure to asymmetric information problems when attempting to identify entrepreneurial projects supported by public funds. Support your recommendations with appropriate rationale.