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Private investment and economic growth in developing countries

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Author Info
Reinhart, Carmen
Khan, Mohsin

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Abstract

Despite the growing support for market-oriented strategies, and for a greater role of private investment, empirical growth models for developing countries typically make no distinction between the private and public components af investment. This paper sheds some light on this important issue by formulating a simple growth model that separates the effects of public sector and private sector investment. This model is estimated for a cross-section sample of 24 developing countries, and the results support the notion that private investment has a larger direct effect on growth than does public investment.

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File URL: http://mpra.ub.uni-muenchen.de/13655/
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 13655.

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Date of creation: 26 Jul 1989
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Publication status: Published in World Development 1.18(1990): pp. 243-258
Handle: RePEc:pra:mprapa:13655

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Related research
Keywords: growth investment public private productivity;

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Find related papers by JEL classification:
E2 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment
E1 - Macroeconomics and Monetary Economics - - General Aggregative Models

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  1. Ram, Rati, 1985. "Exports and Economic Growth: Some Additional Evidence," Economic Development and Cultural Change, University of Chicago Press, vol. 33(2), pages 415-25, January.
  2. Tyler, William G., 1981. "Growth and export expansion in developing countries : Some empirical evidence," Journal of Development Economics, Elsevier, vol. 9(1), pages 121-130, August. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Devarajan, Shantayanan & Easterley, William R. & Pack, Howard, 2001. "Is investment in Africa too low or too high : macro and micro evidence," Policy Research Working Paper Series 2519, The World Bank. [Downloadable!]
  2. Reinhart, Carmen, 1991. "A model of adjustment and growth: An empirical analysis," MPRA Paper 13233, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  3. Levine, Ross & Renelt, David, 1991. "Cross-country studies of growth and policy : methodological, conceptual, and statistical problems," Policy Research Working Paper Series 608, The World Bank. [Downloadable!]
  4. Fofack, Hippolyte, 2009. "Africa and Arab Gulf states : divergent development paths and prospects for convergence," Policy Research Working Paper Series 5025, The World Bank. [Downloadable!]
  5. Marianna Belloc & Pietro Vertova, 2006. "Public Investment and Economic Performance in Highly Indebted Poor Countries: An Empirical Assessment," International Review of Applied Economics, Taylor and Francis Journals, vol. 20(2), pages 151-170, April. [Downloadable!] (restricted)
  6. V.R. Prabhakaran Nair, 2005. "Determinants of fixed investment: A study of Indian private corporate manufacturing sector," Centre for Development Studies, Trivendrum Working Papers 369, Centre for Development Studies, Trivendrum, India. [Downloadable!]
  7. Leonce Ndikumana, 2008. "Can macroeconomic policy stimulate private investment in South Africa? New insights from aggregate and manufacturing sector-level evidence," Journal of International Development, John Wiley & Sons, Ltd., vol. 20(7), pages 869-887. [Downloadable!]
  8. Léonce Ndikumana, 2005. "Can Macroeconomic Policy Stimulate Private Investment in South Africa? New Insights from Aggregate and Manufacturing Sector-Level Evidence," Working Papers wp106, Political Economy Research Institute, University of Massachusetts at Amherst. [Downloadable!]
  9. Rao, B. Bhaskara & Sharma, Kanhaiya Lal & Singh, Rup, 2007. "Estimating aid-growth equations: the case of Pacific Island countries," MPRA Paper 4554, University Library of Munich, Germany, revised 09 Sep 2007. [Downloadable!]
  10. H. Takizawa & E. H. Gardner & Kenichi Ueda, 2004. "Are Developing Countries Better Off Spending their Oil Wealth Upfront?," IMF Working Papers 04/141, International Monetary Fund. [Downloadable!]
  11. Donald W. Snyder, 1996. "Foreign aid and private investment in developing economies," Journal of International Development, John Wiley & Sons, Ltd., vol. 8(6), pages 735-745.
  12. Marianna Belloc & Pietro Vertova, 2004. "How Does Public Investment Affect Economic Growth in HIPC? An Empirical Assessment," Department of Economics University of Siena 416, Department of Economics, University of Siena. [Downloadable!]
  13. Ahmet Faruk Aysan & G. Pang & M-A Veganzones-Varoudakis, 2006. "Uncertainty, Economic Reforms and Private Investment in the Middle East and North Africa," Working Papers 2006/07, Bogazici University, Department of Economics. [Downloadable!]
    Other versions:
  14. Zafar Iqbal & Ghulam Mustafa Zahid, 1998. "Macroeconomic Determinants of Economic Growth in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 37(2), pages 125-148. [Downloadable!]
  15. Rao, B. Bhaskara & Sharma, K.L. & Singh, Rup & Lata, Nalini, 2007. "A Survey of Growth and Development Issues of the Pacific Islands," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  16. Miguel Ramirez, 2002. "Public capital formation and labor productivity growth in Mexico," Atlantic Economic Journal, International Atlantic Economic Society, vol. 30(4), pages 366-379, December. [Downloadable!] (restricted)
  17. Miguel D. Ramirez, 2006. "A Panel Unit Root and Panel Cointegration Test of the Complementarity Hypothesis in the Mexican Case, 1960-2001," Working Papers 942, Economic Growth Center, Yale University. [Downloadable!]
    Other versions:
  18. Renelt, David, 1991. "Economic growth : a review of the theoretical and empirical literature," Policy Research Working Paper Series 678, The World Bank. [Downloadable!]
  19. Lutfi Erden & Randall G. Holcombe, 2006. "The Linkage Between Public and Private Investment: A Co-integration Analysis of a Panel of Developing Countries," Eastern Economic Journal, Eastern Economic Association, vol. 32(3), pages 479-492, Summer. [Downloadable!]
  20. Ahmed Badawi, 2003. "Private capital formation and public investment in Sudan: testing the substitutability and complementarity hypotheses in a growth framework," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(6), pages 783-799. [Downloadable!]
    Other versions:
  21. Léonce Ndikumana, 2005. "Can macroeconomic policy stimulate private investment in South Africa? New insights from aggregate and manufacturing sector-level evidence," Working Papers 2005-14, University of Massachusetts Amherst, Department of Economics. [Downloadable!]
  22. Chhibber, Ajay & Dailami, Mansoor, 1990. "Fiscal policy and private investment in developing countries : recent evidence on key selected issues," Policy Research Working Paper Series 559, The World Bank. [Downloadable!]
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