The effects of public spending composition on firm productivity
This paper exploits the unique institutional features of South Africa to estimate the impact of provincial public spending on health, education and transport on firm productivity. Our identification strategy is based on within industry-province differences between firms of the effects of public spending. We show that public spending composition affects firm productivity depending on the capital intensity of firms relative to the province-industry mean. Our data and empirical specification allow us to rule out that these results are affected by econometric problems that are commonly encountered when estimating the effects of fiscal policy and by unobserved industry- or province-specific productivity shocks. In contrast to related existing microeconomic evidence, we take into account the government budget constraint so that our results have clear policy implications.
|Date of creation:||2013|
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- Norman Gemmell & Florian Misch & Blanca Moreno-Dodson, 2012.
"Public Spending for Long-Run Growth: A Practitioners’ View,"
World Bank - Economic Premise,
The World Bank, issue 99, pages 1-4, December.
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- Jens Arnold & Cyrille Schwellnus, 2008. "Do Corporate Taxes Reduce Productivity and Investment at the Firm Level? Cross-Country Evidence from the Amadeus Dataset," Working Papers 2008-19, CEPII research center.
- Jens Matthias Arnold & Aaditya Mattoo & Gaia Narciso, 2008. "Services Inputs and Firm Productivity in Sub-Saharan Africa: Evidence from Firm-Level Data," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 17(4), pages 578-599, August.
- Arnold, Jens Matthias & Mattoo, Aaditya & Narciso, Gaia, 2006. "Services inputs and firm productivity in Sub-Saharan Africa : evidence from firm-level data," Policy Research Working Paper Series 4048, The World Bank.
- Jean-Jacques Dethier & Maximilian Hirn & Stéphane Straub, 2011. "Explaining Enterprise Performance in Developing Countries with Business Climate Survey Data," World Bank Research Observer, World Bank Group, vol. 26(2), pages 258-309, August.
- Dethier, Jean-Jacques & Hirn, Maximilian & Straub, Stephane, 2008. "Explaining Enterprise Performance in Developing Countries with Business Climate Survey Data," Policy Research Working Paper Series 4792, The World Bank.
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