Does public capital crowd-out or crowd-in private capital in India?

Tarlok Singh

Journal of Economic Policy Reform, 2012, vol. 15, issue 2, 109-133

Abstract: This study examines the long-run effects of public capital on private capital and tests the null of Granger non-causality between public and private capital in India. Both single-equation and system estimates of the model consistently suggest the long-run crowding-in effects of public capital. The error-correction as well as over-parameterized level-VAR models consistently suggest uni-directional Granger-causality from public to private capital. The support for the significant crowding-in effects of public capital has important implications for the formulation of long-term growth and development strategies. It underlines the need to accelerate public infrastructure to induce the distortions-free and market-driven increases in private capital and to attract the inflow of foreign direct investment. The inflows of foreign capital have witnessed perceptible increases since the beginning of the 1990s. The geographical and sectoral distributions of FDI inflows remain asymmetric and skewed in favor of the select regions and the services industries. The services-sector-led growth needs to be accompanied by the commensurate performance of the goods-producing, agricultural and industrial, sectors so as to sustain the escalated trajectory of economic growth.

Date: 2012
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://hdl.handle.net/10.1080/17487870.2012.668767 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:jecprf:v:15:y:2012:i:2:p:109-133

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/GPRE20

DOI: 10.1080/17487870.2012.668767

Access Statistics for this article

Journal of Economic Policy Reform is currently edited by Dr Judith Clifton

More articles in Journal of Economic Policy Reform from Taylor and Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().