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

Andrea Presbitero

No 115, Mo.Fi.R. Working Papers from Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences

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, 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: Absorptive capacity; Donor fragmentation; Infrastructure; Investment projects; Public investment (search for similar items in EconPapers)
JEL-codes: F35 O19 O22 (search for similar items in EconPapers)
Pages: 39
Date: 2015-12
New Economics Papers: this item is included in nep-ppm
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Related works:
Journal Article: Too much and too fast? Public investment scaling-up and absorptive capacity (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:anc:wmofir:115

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