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Public And Private Capital Formation And Economic Growth In Malaysia, 1961-1995

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  • Mansor H. Ibrahim

Abstract

This paper analyzes the productivity of public and private capital formation in a developing economy, Malaysia, using annual data from 1961 to 1995. The analysis is based on neoclassical growth regression, where the transition to the steady-state level of income per capita is modeled using an error correction framework. The results suggest that the public investment has been unproductive over the periods under consideration. Consistent with existing empirical studies, the private investment rate and the export performance of the country are positively related to economic growth. Our results call for a reduction in the public capital formation. However, for this recommendation to be more convincing, we believe that further analyses are much needed to examine which types of public capital are unproductive.

Suggested Citation

  • Mansor H. Ibrahim, 2000. "Public And Private Capital Formation And Economic Growth In Malaysia, 1961-1995," IIUM Journal of Economics and Management, IIUM Journal of Economis and Management, vol. 8(1), pages 21-40, June.
  • Handle: RePEc:ije:journl:v:8:y:2000:i:1:p:21-40
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    File URL: http://www.iium.edu.my/enmjournal/mansor81.pdf
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    References listed on IDEAS

    as
    1. John A. Tatom, 1991. "Public capital and private sector performance," Review, Federal Reserve Bank of St. Louis, issue May, pages 3-15.
    2. Roberto Cellini, 1997. "Growth empirics: evidence from a panel of annual data," Applied Economics Letters, Taylor & Francis Journals, vol. 4(6), pages 347-351.
    3. Phillips, P.C.B., 1986. "Understanding spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 33(3), pages 311-340, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Cointegration; Economic growth; Public capital;

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E69 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Other
    • O49 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Other
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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