Examining the impact of public investment and private investment on economic growth: empirical evidence from BRICS nations

2017 ◽  
Vol 14 (2) ◽  
pp. 128
Author(s):  
Varun Chotia ◽  
N.V. Muralidhar Rao
Keyword(s):  
Economic Growth ◽  
Empirical Evidence ◽  
Public Investment ◽  
Private Investment ◽  
The Impact

Impact of Public and Private Infrastructure Investment on Economic Growth: Evidence from India

2020 ◽  
Vol 12 (2) ◽  
pp. 119-138
Author(s):  
Nishija Unnikrishnan ◽  
Thomas Paul Kattookaran
Keyword(s):  
Economic Growth ◽  
Public Investment ◽  
Impulse Response Function ◽  
Decomposition Analysis ◽  
Private Investment ◽  
Infrastructure Investment ◽  
Public Infrastructure ◽  
Public And Private ◽  
Long Run ◽  
The Impact

Literature presents contradictory views regarding the impact of public and private investment on the economic growth of a country. India being a developing country, where the major share of investment is by public sector, the question which props up is what among public and private investment is contributing more towards the economic growth of the country. In this framework, the gross domestic product (GDP) can be fairly explained as a function of public infrastructure investment and private infrastructure investment. Johansen’s co-integration was used to test the long-run relationship between the variables over the period from 1961–1962 to 2016–2017. A vector error correction model (VECM) along with an impulse response function and variance decomposition analysis was done to measure the impact of public infrastructure investment and private infrastructure investment on the GDP. Based on the empirical evidence discussed earlier, it was evident that both public and private infrastructure investments have a significant impact on the economic growth of the nation. Findings which came up in this study correlate to majority findings of past literature that, when compared with public investment, it is private investment which is capable of giving a better impetus to economic growth.

scholarly journals Econometric Study of the Impact of Public and Private Investment on Economic Growth in Algeria during the Period (1970-2017)

2020 ◽  
pp. 58-69
Author(s):  
Hadjoudj Abdallah ◽  
TchiKo Faouzi
Keyword(s):  
Economic Growth ◽  
Error Correction ◽  
Correction Term ◽  
Public Investment ◽  
Unit Root Test ◽  
Private Investment ◽  
Bounds Testing ◽  
Public And Private ◽  
Percent Increase ◽  
The Impact

This article examines the impact of public and private investment on economic growth in Algeria covering the period from 1970 to 2017. By applying the Auto-Regressive Distributed Lag model (ARDL)-(bounds testing approach). The key findings of the study concluded that there is a long-run relationship between public and private investment and economic growth in Algeria. The result of the Augmented Dickey Fuller unit root test (ADF) showed that the variables are stationary at the level and at the first difference. In addition, the results of the cointegration test indicated that the variables are cointegrated and therefore have the ability to move together over the long term. The parsimonious error correction mechanism showed that private investment is significantly related to economic growth. The result indicated that a 1 percent increase in the present value of private investment, on average, stimulates economic growth by 0.09 percent. Similarly, the value of public investment is positively related to economic growth. On average, a 1 percent increase in public investment stimulates growth in Algeria by 0.05 percent. the results of short-run dynamics reveal that, the error correction term (ECM) is negative and significant (-0.54), which means that 54% of the disequilibrium will be adjusted annually.

scholarly journals Investment and Economic Growth: An Empirical Analysis for Tanzania

2016 ◽  
Author(s):  
Manamba Epaphra ◽  
John Massawe
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Life Expectancy ◽  
Direct Investment ◽  
Public Investment ◽  
Private Investment ◽  
Domestic Investment ◽  
Control Variables ◽  
Lm Test ◽  
The Impact

This paper analyzes the causal effect between domestic private investment, public investment, foreign direct investment and economic growth in Tanzania during the 1970-2014 period. The modified neo-classical growth model that includes control variables such as trade liberalization, life expectancy and macroeconomic stability proxied by inflation is used to estimate the impact of investment on economic growth. Also, the economic growth models based on Phetsavong and Ichihashi (2012), and Le and Suruga (2005) are used to estimate the crowding out effect of public investment on private domestic investment on one hand and foreign direct investment on the other hand. A correlation test is applied to check the correlation among independent variables, and the results show that there is very low correlation suggesting that multicollinearity is not a serious problem. Moreover, the diagnostic tests including RESET regression errors specification test, Breusch-Godfrey serial correlation LM test, Jacque-Bera-normality test and white heteroskedasticity test reveal that the model has no signs of misspecification and that, the residuals are serially uncorrelated, normally distributed and homoskedastic. Generally, the empirical results show that the domestic private investment plays an important role in economic growth in Tanzania. FDI also tends to affect growth positively, while control variables such as high population growth and inflation appear to harm economic growth. Results also reveal that control variables such as trade openness and life expectancy improvement tend to increase real GDP growth. Moreover, a revealed negative, albeit weak, association between public and private investment suggests that the positive effect of domestic private investment on economic growth reduces when public investment-to-GDP ratio exceeds 8-10 percent. Thus, there is a great need for promoting domestic saving so as to encourage domestic investment for economic growth.

scholarly journals The Linkage between Public, Private Investment and Economic Growth—Evidence for the Developing ASEAN and Asian Countries

2017 ◽  
Vol 3 (4) ◽  
pp. 580 ◽  
Author(s):  
Nguyen Thi Canh, PhD. Prof. ◽  
Nguyen Anh Phong, PhD.
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Positive Impact ◽  
Public Investment ◽  
Private Investment ◽  
Public Private Partnership ◽  
Long Term Effects ◽  
Private Partnership ◽  
The Impact

<p><em>This study used a quantitative method to assess the impact of public investment on private investment and economic growth based on data from 18 developing countries over a 21-year period (1995-2015) by applying PVAR model combined with GMM. The findings show that all public investment and public-private partnership investments affect private investment as well as affect economic growth but the effects vary cyclically, by time period, and by group of countries.</em></p><p><em>For the ASEAN developing countries, public investment crowds out private investment in short term and crowds in private investment in the medium and long term, but it crowds out public-private partnership investment. For the developing countries in Asia, public investment has a positive impact on economic growth with the inverted U-shaped pattern which stimulates growth in the short and medium term, but in the long-term effects of stimulation growth tend to decrease.</em></p>

scholarly journals Effect of Public Investment on Private Investment and Economic Growth: Evidence From Vietnam by Economic Industries

2018 ◽  
Vol 5 (2) ◽  
pp. 95 ◽  
Author(s):  
Nguyen Thi Canh ◽  
Nguyen Anh Phong
Keyword(s):  
Economic Growth ◽  
Capital Stock ◽  
Positive Impact ◽  
Public Investment ◽  
Private Investment ◽  
Private Capital ◽  
Short Term ◽  
State Sector ◽  
The Impact

This study is to assess the impact of public investment on private investment and economic growth in Vietnam based on data from 22 economic industries over a 27-year period (1990-2016) by applying PVAR model combined with GMM. The results show that public investment and state sector investment (including public investment and state-owned enterprise investment for production and business activities) has the same positive impact economic growth in most economic industries in the long term, but state sector investment also creates more growth effects in the short term. Public investment has a cyclical impact on private capital stock (domestic private + FDI capital stock) and FDI investment; it has the effect of boosting domestic private investment, FDI investment in the short and long term. Meanwhile, state-sector investment has decreased the private capital stock in the short term, crowds out domestic private and FDI investments in the short term, and in the long term. Both public investment and state sector investment has the effect of increasing public debt in the long term. Based on these results we have some policy recommendations to increase efficiency of public investment and state sector investment.

scholarly journals Direct and indirect effects of investment on community welfare

2019 ◽  
Vol 16 (3) ◽  
pp. 206-216 ◽  
Author(s):  
Baldric Siregar
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Local Governments ◽  
Public Investment ◽  
Private Investment ◽  
Public And Private ◽  
The People ◽  
Private And Public ◽  
The Government ◽  
The Impact

Despite the fact that the government is the main actor of economic development, it also invites private parties to be actively involved in the economic development. The main objective of public and private investment is economic development. But the ultimate goal of investment and economic development itself is to improve the welfare of the community. This study seeks to investigate the effect of private and public investment on economic growth. Furthermore, it also investigates the impact the investment on the community welfare either directly or indirectly through economic growth by way of analyzing the data on private and public investment, economic growth, and the human development index of local governments in Indonesia for the period from 2012 to 2016. Hypotheses were tested using PLS (Partial Least Squares). The results show that both private and public investment directly influence economic growth and indirectly affect the welfare of the people through economic growth. Direct test results also show the positive effect of economic growth on community welfare.

scholarly journals The Impact of Public Investment on Economic Growth in Pakistan

2006 ◽  
Vol 45 (1) ◽  
pp. 87-98 ◽  
Author(s):  
Ejaz Ghani ◽  
Musleh-ud Din
Keyword(s):  
Economic Growth ◽  
Public Investment ◽  
Private Investment ◽  
Jel Classification ◽  
Vector Autoregressive ◽  
Public Consumption ◽  
Strong Inference ◽  
The Impact ◽  
Theoretical Considerations

This paper explores the role of public investment in the process of economic growth, in the context of Pakistan’s economy, using the vector autoregressive approach (VAR). Based on theoretical considerations, the model also includes private investment and public consumption besides public investment. The results show that growth is largely driven by private investment and that no strong inference can be drawn from the effects of public investment and public consumption on economic growth. JEL Classification: E2, 04. Keywords: Public Investment, Economic Growth.

scholarly journals Investment and Economic Growth: An Empirical Analysis for Tanzania

2016 ◽  
Author(s):  
Manamba Epaphra ◽  
John Massawe
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Causal Effect ◽  
Public Investment ◽  
Private Investment ◽  
Domestic Saving ◽  
Crowding Out ◽  
Lm Test ◽  
The Impact

This paper analyzes the causal effect between domestic private investment, public investment, foreign direct investment and economic growth in Tanzania during the 1970-2014 period. The modified neo-classical growth model is used to estimate the ieffect of investment on economic growth. Also, the economic growth models based on Phetsavong and Ichihashi (2012) [1], and Le and Suruga (2005) [2]are used to estimate the crowding out effect of public investment on domestic private investment on one hand and foreign direct investment on the other hand. In the same way, the crowding out effect of foreign direct investment on domestic private investment is estimated. A correlation test is applied to check the correlation among independent variables, and the results show that there is very low correlation suggesting that multicollinearity is not a serious problem. Moreover, the diagnostic tests including RESET regression errors specification test, Breusch-Godfrey serial correlation LM test, Jacque-Bera-normality test and white heteroskedasticity test reveal that the model has no signs of misspecification and that, the residuals are serially uncorrelated, normally distributed and homoskedastic. Broadly, the empirical results show that the domestic private investment and foreign direct investment play an important role in economic growth in Tanzania. Besides, a revealed negative, albeit weak, association between public and private investment suggests that the positive effect of domestic private investment on economic growth becomes smaller when public investment-to-GDP ratio exceeds 8-10 percent. Similarly, foreign direct investment tends to marginally reduce the impact of domestic private investment on growth. These results suggest that public investment and foreign direct investment need to be considered carefully in order to avoid a reduced positive impact of domestic private investment on growth. Domestic saving may be promoted to encourage domestic investment for economic growth.

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