IDEAS home Printed from https://ideas.repec.org/a/kap/atlecj/v49y2021i2d10.1007_s11293-021-09714-5.html
   My bibliography  Save this article

Efficiency-adjusted Public Capital and Economic Growth in Guyana: A Cointegration Analysis

Author

Listed:
  • Nelson C. Modeste

    (Tennessee State University)

Abstract

Using data for Guyana that spans the period 1980 to 2017, this study assessed the impact of efficiency-adjusted public capital on the country’s overall economic growth and expenditures for private investment. This paper contributes to the literature in four ways. First, it constructed an efficiency-adjusted and unadjusted public capital stock series for Guyana, a less developed country within the Caribbean Community, using an amended perpetual inventory model. Second, with the aid of a modified Cobb–Douglas production function, the study identified a positive connection between the efficiency-adjusted public capital stock and growth in the economy. Third, the paper shows that the adoption of the country’s Economic Recovery Program helped to boost the impact of public capital formation on the economy’s output. Finally, the paper shows that public capital growth partially crowded-out private sector investment spending in the economy which can nevertheless expand with economic growth.

Suggested Citation

  • Nelson C. Modeste, 2021. "Efficiency-adjusted Public Capital and Economic Growth in Guyana: A Cointegration Analysis," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 49(2), pages 187-199, June.
    • Handle: RePEc:kap:atlecj:v:49:y:2021:i:2:d:10.1007_s11293-021-09714-5
    DOI: 10.1007/s11293-021-09714-5
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11293-021-09714-5
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s11293-021-09714-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Caselli, Francesco, 2005. "Accounting for Cross-Country Income Differences," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 9, pages 679-741, Elsevier.
    2. Ernesto Crivelli, 2020. "Efficiency‐adjusted public capital, capital grants, and growth," Review of Development Economics, Wiley Blackwell, vol. 24(1), pages 254-268, February.
    3. Pritchett, Lant, 2000. "The Tyranny of Concepts: CUDIE (Cumulated, Depreciated, Investment Effort) Is Not Capital," Journal of Economic Growth, Springer, vol. 5(4), pages 361-384, December.
    4. Robert Ford & Pierre Poret, 1991. "Infrastructure and Private-Sector Productivity," OECD Economics Department Working Papers 91, OECD Publishing.
    5. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
    6. John A. Tatom, 1991. "Public capital and private sector performance," Review, Federal Reserve Bank of St. Louis, issue May, pages 3-15.
    7. Nehru, Vikram & Swanson, Eric & Dubey, Ashutosh, 1993. "A new database on human capital stock : sources, methodology and results," Policy Research Working Paper Series 1124, The World Bank.
    8. Alicia H. Munnell, 1990. "Why has productivity growth declined? Productivity and public investment," New England Economic Review, Federal Reserve Bank of Boston, issue Jan, pages 3-22.
    9. Christophe Kamps, 2006. "New Estimates of Government Net Capital Stocks for 22 OECD Countries, 1960-2001," IMF Staff Papers, Palgrave Macmillan, vol. 53(1), pages 1-6.
    10. Sturm, Jan Egbert & de Haan, Jakob, 1995. "Is public expenditure really productive?: New evidence for the USA and The Netherlands," Economic Modelling, Elsevier, vol. 12(1), pages 60-72, January.
    11. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    12. Berlemann Michael & Wesselhöft Jan-Erik, 2014. "Estimating Aggregate Capital Stocks Using the Perpetual Inventory Method: A Survey of Previous Implementations and New Empirical Evidence for 103 Countries," Review of Economics, De Gruyter, vol. 65(1), pages 1-34, April.
    13. Caselli, Francesco, 2005. "Accounting for cross-country income differences," LSE Research Online Documents on Economics 5266, London School of Economics and Political Science, LSE Library.
    14. Gupta, Sanjeev & Kangur, Alvar & Papageorgiou, Chris & Wane, Abdoul, 2014. "Efficiency-Adjusted Public Capital and Growth," World Development, Elsevier, vol. 57(C), pages 164-178.
    15. Mr. Serkan Arslanalp & Fabian Bornhorst & Mr. Sanjeev Gupta & Ms. Elsa Sze, 2010. "Public Capital and Growth," IMF Working Papers 2010/175, International Monetary Fund.
    16. Ward Romp & Jakob De Haan, 2007. "Public Capital and Economic Growth: A Critical Survey," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 8(S1), pages 6-52, April.
    17. Paresh Kumar Narayan, 2005. "The saving and investment nexus for China: evidence from cointegration tests," Applied Economics, Taylor & Francis Journals, vol. 37(17), pages 1979-1990.
    18. Caselli, Francesco, 2005. "Accounting for cross-country income differences," LSE Research Online Documents on Economics 3567, London School of Economics and Political Science, LSE Library.
    19. Pedro R.D. Bom & Jenny E. Ligthart, 2009. "How Productive is Public Capital? A Meta-Regression Analysis," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0912, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    20. Christophe Kamps, 2006. "New Estimates of Government Net Capital Stocks for 22 OECD Countries, 1960-2001," IMF Staff Papers, Palgrave Macmillan, vol. 53(1), pages 1-6.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gupta, Sanjeev & Kangur, Alvar & Papageorgiou, Chris & Wane, Abdoul, 2014. "Efficiency-Adjusted Public Capital and Growth," World Development, Elsevier, vol. 57(C), pages 164-178.
    2. An, Zidong & Kangur, Alvar & Papageorgiou, Chris, 2019. "On the substitution of private and public capital in production," European Economic Review, Elsevier, vol. 118(C), pages 296-311.
    3. Trofimov, Ivan D., 2020. "Public capital and productive economy profits: evidence from OECD economies," MPRA Paper 106848, University Library of Munich, Germany.
    4. Ward Romp & Jakob De Haan, 2007. "Public Capital and Economic Growth: A Critical Survey," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 8(S1), pages 6-52, April.
    5. Li, Y. & Murshed, S.M. & Papyrakis, E., 2021. "Public capital and income inequality: some empirical evidence," ISS Working Papers - General Series 677, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    6. Pedro R.D. Bom & Jenny E. Ligthart, 2009. "How Productive is Public Capital? A Meta-Regression Analysis," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0912, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    7. Renato Santiago & Matheus Koengkan & José Alberto Fuinhas & António Cardoso Marques, 2020. "The relationship between public capital stock, private capital stock and economic growth in the Latin American and Caribbean countries," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 67(3), pages 293-317, September.
    8. Giovanni Ganelli & Juha Tervala, 2020. "Welfare Multiplier of Public Investment," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 68(2), pages 390-420, June.
    9. Alfredo M. Pereira & Jorge M. Andraz, 2013. "On The Economic Effects Of Public Infrastructure Investment: A Survey Of The International Evidence," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 38(4), pages 1-37, December.
    10. Pedro R.D. Bom & Jenny E. Ligthart, 2014. "What Have We Learned From Three Decades Of Research On The Productivity Of Public Capital?," Journal of Economic Surveys, Wiley Blackwell, vol. 28(5), pages 889-916, December.
    11. Andreas P. Kyriacou & Leonel Muinelo-Gallo & Oriol Roca-Sagalés, 2018. "The efficiency of transport infrastructure investment and the role of institutions: an empirical analysis," Working Papers. Collection B: Regional and sectoral economics 1802, Universidade de Vigo, GEN - Governance and Economics research Network.
    12. Abiad (ADB), Abdul & Furceri (IMF and University of Palermo), Davide & Topalova (IMF), Petia, 2016. "The macroeconomic effects of public investment: Evidence from advanced economies," Journal of Macroeconomics, Elsevier, vol. 50(C), pages 224-240.
    13. Sahoo, Pravakar & Dash, Ranjan Kumar & Nataraj, Geethanjali, 2010. "Infrastructure development and economic growth in China," IDE Discussion Papers 261, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    14. Era Dabla-Norris & Jim Brumby & Annette Kyobe & Zac Mills & Chris Papageorgiou, 2012. "Investing in public investment: an index of public investment efficiency," Journal of Economic Growth, Springer, vol. 17(3), pages 235-266, September.
    15. German Cubas, 2010. "Accounting for Cross-Country Income Differences with Public Capital," Documentos de Trabajo (working papers) 3410, Department of Economics - dECON.
    16. Mr. Frederick L Joutz & Mr. Yasser Abdih, 2008. "The Impact of Public Capital, Human Capital, and Knowledge on Aggregate Output," IMF Working Papers 2008/218, International Monetary Fund.
    17. Zolfaghari, Mehdi & Kabiri, Mahbobe & Saadatmanesh, Hamideh, 2020. "Impact of socio-economic infrastructure investments on income inequality in Iran," Journal of Policy Modeling, Elsevier, vol. 42(5), pages 1146-1168.
    18. Pellervo Hamalainen, 2009. "Review of literature on the productivity of public capital," Discussion Papers 55, Aboa Centre for Economics.
    19. Matthew Lowe & Chris Papageorgiou & Fidel Perez-Sebastian, 2012. "The Public and Private MPK," DEGIT Conference Papers c017_021, DEGIT, Dynamics, Economic Growth, and International Trade.
    20. Holmgren, Johan & Merkel, Axel, 2017. "Much ado about nothing? – A meta-analysis of the relationship between infrastructure and economic growth," Research in Transportation Economics, Elsevier, vol. 63(C), pages 13-26.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:atlecj:v:49:y:2021:i:2:d:10.1007_s11293-021-09714-5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.