Too much and too fast? Public investment scaling-up and absorptive capacity

Andrea Presbitero

Journal of Development Economics, 2016, vol. 120, issue C, 17-31

Abstract: A recent trend in several low-income developing countries has been a rapid scaling-up of public investment. It is argued that in the presence of limited absorptive capacity countries are not able – in terms of skills, institutions, and management – to translate additional public investment into sustained output growth. We test for the presence of absorptive capacity constraints using a large dataset of World Bank investment projects, approved between 1970 and 2007 in 80 countries. Our results indicate that projects undertaken in periods of public investment scaling-up are less likely to be successful, although this effect is relatively small, especially in poor and capital scarce countries. We also verify that this effect is unrelated to large aid flows and donor fragmentation.

Keywords: Public investment; Absorptive capacity; Investment projects; Donor fragmentation; Infrastructure (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (32)

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Working Paper: Too much and too fast? Public investment scaling-up and abssoptive capacity (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:120:y:2016:i:c:p:17-31

DOI: 10.1016/j.jdeveco.2015.12.005

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