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The Effects Of Public Spending Composition On Firm Productivity

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  • RICHARD KNELLER
  • FLORIAN MISCH

Abstract

type="main" xml:id="ecin12092-abs-0001"> This paper exploits the unique institutional features of South Africa to estimate the impact of provincial public spending on firm productivity. In contrast to existing microeconomic evidence, we explore the effects of fiscal expenditures and remove the effects of revenue raising policies. Our identification strategy is based on differences in the effects of public spending across firms within the same industry and province. We show that public spending composition affects productivity depending on the capital intensity of firms, with less capital intensive firms being particularly affected. These effects appear to be robust. (JEL D24, H32, H72)

Suggested Citation

  • Richard Kneller & Florian Misch, 2014. "The Effects Of Public Spending Composition On Firm Productivity," Economic Inquiry, Western Economic Association International, vol. 52(4), pages 1525-1542, October.
    • Handle: RePEc:bla:ecinqu:v:52:y:2014:i:4:p:1525-1542
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    Cited by:

    1. Gumede, Vusi & Bila, Santos, 2022. "Applying the National Income Identity Approach in Examining Determinants of Economic Growth in South Africa," African Journal of Economic Review, African Journal of Economic Review, vol. 10(2), April.
    2. Era Dabla-Norris & Florian Misch & Duncan Cleary & Munawer Khwaja, 2020. "The quality of tax administration and firm performance: evidence from developing countries," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(3), pages 514-551, June.
    3. Sanja Borkovic & Peter Tabak, 2018. "Public investment and corporate productivity in Croatia," Public Sector Economics, Institute of Public Finance, vol. 42(2), pages 171-186.
    4. Maty Konte & Godsway Korku Tetteh, 2023. "Mobile money, traditional financial services and firm productivity in Africa," Small Business Economics, Springer, vol. 60(2), pages 745-769, February.
    5. Luc Jacolin & Joseph Keneck Massil & Alphonse Noah, 2021. "Informal sector and mobile financial services in emerging and developing countries: Does financial innovation matter?," The World Economy, Wiley Blackwell, vol. 44(9), pages 2703-2737, September.
    6. Bakhtiari, Sasan, 2021. "Government financial assistance as catalyst for private financing," International Review of Economics & Finance, Elsevier, vol. 72(C), pages 59-78.
    7. Liudmila Ivanovna Khoruzhy & Malvina Rasulovna Karabasheva & Hafis Ahmed oglu Hajiyev & Natalia Nikolaevna Zhadobina & Natalia Andreevna Alekhina & Rustem Adamovich Shichiyakh, 2020. "Controlled foreign companies: influence on the sovereignty of the national tax base," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(2), pages 33-50, December.
    8. Ahmed, Riaz, 2016. "Social infrastructure and productivity of manufacturing firms: Evidence from Pakistan," ZEW Discussion Papers 16-038, ZEW - Leibniz Centre for European Economic Research.
    9. Amin, Mohammad & Islam, Asif, 2015. "Are Large Informal Firms More Productive than the Small Informal Firms? Evidence from Firm-Level Surveys in Africa," World Development, Elsevier, vol. 74(C), pages 374-385.

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    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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