The Quality of Public Investment

Shankha Chakraborty () and Dabla-Norris, Era

No 09/154, IMF Working Papers from International Monetary Fund

Abstract: This paper develops a growth model with specialized goods where inefficient and corrupt bureaucracies interact with the provision of public investment services in affecting the productivity of private capital, specialization, and growth. The model provides potential explanations for the contradictory empirical results on the effects of public investment found in the literature as well as for the role of the quality of public infrastructure investment in creating a gap between rich and poor countries. From a policy perspective, the paper suggests that the link between public investment and growth depends critically on the quality and efficiency of public capital.

Keywords: Corruption; Economic growth; Economic models; Governance; Government expenditures; Infrastructure; Low-income developing countries; Private investment; Public investment (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe
Date: 2009-07-07
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