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Private Capital Formation and Public Investment in Sudan: Testing the Substitutability and Complementarity Hypotheses in a Growth Framework

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Abstract

The paper attempts to address the issue of complementarity and substitutability of state capital to private sector investment activities in a neoclassical growth framework. It employs a co-integrated vector autoregressive model to account for potential endogeneity and nonstationarity problems. Results suggest that both private and public capital spending have stimulated economic growth in Sudan over the period 1970-1998. The impact of private investment on real growth has been more pronounced than that of public sector investment. Public sector investment appears to have deleteriously impacted private sector physical capital expansion, implying that the impact of crowding-out categories of public sector investment has been large enough to offset any crowding-in effects. Such crowding out effect has weakened favourable positive effect that public sector's investment has exerted on growth by jeopardising private sector capital undertakings. Copyright © 2003 John Wiley & Sons, Ltd.
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  • A Badawi, 2003. "Private Capital Formation and Public Investment in Sudan: Testing the Substitutability and Complementarity Hypotheses in a Growth Framework," Economics Discussion Paper Series 0316, Economics, The University of Manchester.
    • Handle: RePEc:man:sespap:0316
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    2. Nusrat Akber & Megha Gupta & Kirtti Ranjan Paltasingh, 2020. "The Crowding-in/ out Debate in Investments in India: Fresh Evidence from NARDL Application," South Asian Journal of Macroeconomics and Public Finance, , vol. 9(2), pages 167-189, December.
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    4. Usman.A & Mobolaji H. I & Kilishi A.A & Yaru M. A & Yakubu, T. A, 2011. "Public Expenditure And Economic Growth In Nigeria," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 1(3), pages 104-113, September.
    5. Ibrahim B. Kamara, 2007. "The Direct Productivity Impact of Infrastructure Investment: Dynamic Panel Data Evidence From Sub Saharan Africa," Working Papers 048, Economic Research Southern Africa.
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    7. Ahsan Abbas & Eatzaz Ahmed & Fazal Husain, 2019. "Political and Economic Uncertainty and Investment Behaviour in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 58(3), pages 307-331.

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