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Are Public Investment Efficient in Creating Capital Stocks in Developing Countries?

Author

Listed:
  • Christophe Hurlin

    () (University of Orleans, LEO)

  • Florence Arestoff

    () (Université Paris Dauphine, LEDa)

Abstract

In many poor countries, the problem is not that governments do not invest, but that these investments do not create productive capital. So, the cost of public investments does not correspond to the value of the capital stocks. In this paper, we propose an original non parametric approach to evaluate the efficiency function that links variations (net of depreciation) of stocks to public investments. We consider four sectors (electricity, telecommunications, roads and railways) of two Latin American countries (Mexico and Colombia). We show that there is a large discrepancy between the amount of investments and the value of increases in stocks.

Suggested Citation

  • Christophe Hurlin & Florence Arestoff, 2010. "Are Public Investment Efficient in Creating Capital Stocks in Developing Countries?," Economics Bulletin, AccessEcon, vol. 30(4), pages 3177-3187.
  • Handle: RePEc:ebl:ecbull:eb-09-00755
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    File URL: http://www.accessecon.com/Pubs/EB/2010/Volume30/EB-10-V30-I4-P293.pdf
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    Citations

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    Cited by:

    1. Gerhard Glomm & Juergen Jung, 2015. "A Macroeconomic Analysis Of Energy Subsidies In A Small Open Economy," Economic Inquiry, Western Economic Association International, vol. 53(4), pages 1783-1806, October.
    2. Florian Morvillier, 2020. "Infrastructures and the real exchange rate," EconomiX Working Papers 2020-26, University of Paris Nanterre, EconomiX.
    3. 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.
    4. Christine J. Richmond & Irene Yackovlev & Susan S. Yang, 2013. "Investing Volatile Oil Revenues in Capital-Scarce Economies; An Application to Angola," IMF Working Papers 13/147, International Monetary Fund.
    5. Andrew Berg & Edward F. Buffie & Catherine Pattillo & Rafael Portillo & Andrea F. Presbitero & Luis‐Felipe Zanna, 2019. "Some Misconceptions About Public Investment Efficiency and Growth," Economica, London School of Economics and Political Science, vol. 86(342), pages 409-430, April.
    6. Christine Richmond & Irene Yackovlev & Shu-Chun S. Yang, 2015. "Investing Volatile Resource Revenues in Capital-Scarce Economies," Pacific Economic Review, Wiley Blackwell, vol. 20(1), pages 193-221, February.
    7. Adrian Alter & Matteo Ghilardi & Dalia S Hakura, 2015. "Public Investment in a Developing Country Facing Resource Depletion," IMF Working Papers 15/236, International Monetary Fund.
    8. Timuno, Sayed O.M & Eita, Joel Hinaunye, 2020. "Towards an effective fiscal stimulus: evidence from Botswana," MPRA Paper 101377, University Library of Munich, Germany.
    9. Shen, Wenyi & Yang, Shu-Chun S. & Zanna, Luis-Felipe, 2018. "Government spending effects in low-income countries," Journal of Development Economics, Elsevier, vol. 133(C), pages 201-219.
    10. Hallonsten, Jan Simon & Ziesemer, Thomas, 2016. "A semi-endogenous growth model for developing countries with public factors, imported capital goods, and limited export demand," MERIT Working Papers 2016-004, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    11. Luis-Felipe Zanna & Olivier Basdevant & Susan S. Yang & Genevieve Verdier & Joannes Mongardini & Borislava Mircheva & Dalmacio Benicio, 2011. "The Design of Fiscal Adjustment Strategies in Botswana, Lesotho, Namibia, and Swaziland," IMF Working Papers 11/266, International Monetary Fund.
    12. Andrew Berg & Edward F. Buffie & Catherine Pattillo & Rafael Portillo & Andrea F. Presbitero & Luis‐Felipe Zanna, 2019. "Some Misconceptions About Public Investment Efficiency and Growth," Economica, London School of Economics and Political Science, vol. 86(342), pages 409-430, April.

    More about this item

    Keywords

    Public Capital | Capital Stocks | Developing Countries;

    JEL classification:

    • C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment

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