Well, it's been over 20yrs since i studied economics at school, so everything that follows may be complete nonsense, but i'll have a go.
I believe it's based on the premise that one must speculate to accumulate.
From the Governments point of view that means it has to try to stir the private sector into positive action in the hope that it results in both employment and spending within it's nation which in turn results in more revenue from taxes.
As an example, in the the UK in the 1980's the Government invested heavily in the infrastructure of deprived areas of the country, then gave huge tax breaks to large multinational companies (mostly Japanese may i add) in the hope some would take the bait and build factories in these areas (an example of this is John Delorean building his factory in Belfast, although that soon went tits up :schwitz
Anyway, many foreign companies did take the bait, which resulted in increased employment in those areas, which in turn resulted in increased spending by those newly employed individuals, which in turn resulted in more revenue (income for the government) through income tax and vat etc.
So, as a result those particular areas of the country now had more spending power due to lower unemployment, which lead to more shops/leisure/entertainment outlets etc, being located there, which also lead to greater revenue through taxes for the government.
An odd fact, (although nothing to do with the topic) but, in the UK the largest retail outlets and the highest proportion of shops per person, are all in areas that have a history of high unemployment and poor health. Essentially the working classes like to spend their money, while the middle classes like to save their money. In a nutshell (and perhaps bizarrely), a nation that saves it's money has an unhealthy economy, but a nation that spends it's money has a healthy economy
Simply put, it's like an economic snowball that the government/state throws from the top of a large hill which (hopefully) gets bigger and bigger as it rolls down the hill, from which the state can then take their share.
Hopefully someone else will come along and explain it a bit better, but, that's about the best explanation i can come up with after all these years, and my memory's not all that good these days
quick edit: Lol 3 people posted at exactly the same time...and guess who came last..