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Is Public Capital More Productive than Private Capital: Evidence from Latvia 1995-2009

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  • Olegs Krasnopjorovs

Abstract

The purpose of this article is to estimate private and public capital contribution to economic growth in Latvia 1995-2009 using production function approach. It was found that both private and public capital have positive and statistically significant impact on economic growth and labour productivity. Moreover, public capital is 1.6 times more productive than private capital. Nevertheless, private capital accumulation affects technical progress through "learning by doing" externality. It was shown that total factor productivity and private capital formation were the main driving forces of economic growth in Latvia 1995-2009. It was pointed out that production function should be augmented with cyclical variables when output is constrained by the aggregate demand which is a case for Latvia in 2008-2009.

Suggested Citation

  • Olegs Krasnopjorovs, 2011. "Is Public Capital More Productive than Private Capital: Evidence from Latvia 1995-2009," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 168-180.
    • Handle: RePEc:bas:econst:y:2011:i:3:p:168-180
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    Cited by:

    1. Krasnopjorovs, Olegs, 2013. "Latvijas ekonomikas izaugsmi noteicošie faktori [Factors of Economic Growth in Latvia]," MPRA Paper 47550, University Library of Munich, Germany.
    2. Krasnopjorovs, Olegs, 2013. "Factors of Economic Growth in Latvia," MPRA Paper 45500, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • H4 - Public Economics - - Publicly Provided Goods
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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