Analyzing economic growth: what role for public investment?

Youssef Oukhallou

MPRA Paper from University Library of Munich, Germany

Abstract: This paper discusses the role of public investment in the determination of output growth from different theoretical and empirical points of view. The light is shed on the factors that allegedly explain the success and/or the failure of public investment policies in enhancing productivity and supporting GDP, based on a review of empirical evidence in advanced and developing economies. The downstream objective is to provide decision makers with a set of general rules-of-thumb that are likely to help them improve the macroeconomic returns of public investment. The latter are found to be significantly influenced by efficiency and profitability-based selectivity of investment projects. Countries with a relatively low capital-labor ratio usually have higher public and private capital profitability, while the public-private investment substitutability increases the likelihood of crowding out effects. The paper also gives hints on the possible existence of an optimal growth-maximizing level of public investment.

Keywords: GDP growth; Public Investment; Productivity; Private Investment; Development (search for similar items in EconPapers)
JEL-codes: E62 H54 O40 (search for similar items in EconPapers)
Date: 2016-02-13
New Economics Papers: this item is included in nep-fdg, nep-gro, nep-mac and nep-ppm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:69772

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