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How Does Public Investment Affect Economic Growth in HIPC? An Empirical Assessment

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  • Marianna Belloc
  • Pietro Vertova

Abstract

A better assessment of the impact of public investment on economic performance is crucial in order to design and implement effective fiscal policies for adjustment with growth in highly indebted poor countries. In this paper we investigate empirically the relationship between public investment, private investment and output, providing a dynamic econometric procedure on a selected group of Highly Indebted Poor Countries (HIPCs). Our results provide empirical support for both the crowding-in hypothesis and a positive effect of public investment on output.

Suggested Citation

  • 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.
    • Handle: RePEc:usi:wpaper:416
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    References listed on IDEAS

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    Cited by:

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    2. Agenor, Pierre-Richard & Nabli, Mustapha K. & Yousef, Tarik M., 2005. "Public infrastructure and private investment in the Middle East and North Africa," Policy Research Working Paper Series 3661, The World Bank.
    3. Garikai Makuyana & Nicholas M. Odhiambo, 2019. "Public and private investment and economic growth in Malawi: an ARDL-bounds testing approach," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 32(1), pages 673-689, January.
    4. Agénor, Pierre-Richard & Bayraktar, Nihal & El Aynaoui, Karim, 2008. "Roads out of poverty? Assessing the links between aid, public investment, growth, and poverty reduction," Journal of Development Economics, Elsevier, vol. 86(2), pages 277-295, June.
    5. Makuyana, Garikai & Odhiambo, Nicholas Mbaya, 2017. "Public and private investment and economic growth in South Africa:An empirical investigation," Working Papers 22005, University of South Africa, Department of Economics.
    6. MAKUYANA, Garikai & ODHIAMBO, Nicholas M., 2018. "Public and Private Investment and Economic Growth in Zambia: A Dynamic Approach," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 71(4), pages 503-526.
    7. Yongzheng Yang & Mr. Robert Powell & Mr. Sanjeev Gupta, 2005. "The Macroeconomic Challenges of Scaling Up Aid to Africa," IMF Working Papers 2005/179, International Monetary Fund.
    8. Makuyana, Garikai & Odhiambo, Nicholas M., 2017. "Public and private investment and economic growth in Zimbabwe: An empirical test," Business and Economic Horizons (BEH), Prague Development Center (PRADEC), vol. 13(1).
    9. Nishija Unnikrishnan & Thomas Paul Kattookaran, 2020. "Impact of Public and Private Infrastructure Investment on Economic Growth: Evidence from India," Journal of Infrastructure Development, India Development Foundation, vol. 12(2), pages 119-138, December.
    10. Pinto Moreira, Emmanuel & Bayraktar, Nihal, 2005. "A macroeconomic framework for quantifying growth and poverty reduction strategies in Niger," Policy Research Working Paper Series 3506, The World Bank.

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    More about this item

    Keywords

    Fiscal adjustment; public investment; crowding-in; Highly Indebted Poor Countries (HIPCs).;
    All these keywords.

    JEL classification:

    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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