Does public capital crowd-out or crowd-in private capital in India?
This study examines the long-run effects of public capital on private capital and tests the null of Granger non-causality between public and private capital in India. Both single-equation and system estimates of the model consistently suggest the long-run crowding-in effects of public capital. The error-correction as well as over-parameterized level-VAR models consistently suggest uni-directional Granger-causality from public to private capital. The support for the significant crowding-in effects of public capital has important implications for the formulation of long-term growth and development strategies. It underlines the need to accelerate public infrastructure to induce the distortions-free and market-driven increases in private capital and to attract the inflow of foreign direct investment. The inflows of foreign capital have witnessed perceptible increases since the beginning of the 1990s. The geographical and sectoral distributions of FDI inflows remain asymmetric and skewed in favor of the select regions and the services industries. The services-sector-led growth needs to be accompanied by the commensurate performance of the goods-producing, agricultural and industrial, sectors so as to sustain the escalated trajectory of economic growth.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 15 (2012)
Issue (Month): 2 (June)
|Contact details of provider:|| Web page: http://www.tandfonline.com/GPRE19|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/GPRE19|
When requesting a correction, please mention this item's handle: RePEc:taf:jpolrf:v:15:y:2012:i:2:p:109-133. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty)
If references are entirely missing, you can add them using this form.