Are Public Investment Efficient in Creating Capital Stocks in Developing Countries?

Christophe Hurlin and Florence Arestoff ()
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Florence Arestoff: Université Paris Dauphine, LEDa

Economics Bulletin, 2010, vol. 30, issue 4, 3177-3187

Abstract: In many poor countries, the problem is not that governments do not invest, but that these investments do not create productive capital. So, the cost of public investments does not correspond to the value of the capital stocks. In this paper, we propose an original non parametric approach to evaluate the efficiency function that links variations (net of depreciation) of stocks to public investments. We consider four sectors (electricity, telecommunications, roads and railways) of two Latin American countries (Mexico and Colombia). We show that there is a large discrepancy between the amount of investments and the value of increases in stocks.

Keywords: Public; Capital; |; Capital; Stocks; |; Developing; Countries (search for similar items in EconPapers)
JEL-codes: C8 E2 (search for similar items in EconPapers)
Date: 2010-12-02
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Citations: View citations in EconPapers (12)

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