Government Investment and Economic Growth in the Developing World (The Distinguishedl Lecture)

1996 ◽  
Vol 35 (4I) ◽  
pp. 419-439 ◽  
Author(s):  
Mohsin S. Khan
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Private Sector ◽  
Developing World ◽  
Public Investment ◽  
Private Investment ◽  
New Paradigm ◽  
Economic Activities ◽  
Government Investment ◽  
The Government

There has been a sea change in the views of the economics profession as well as economic policy-makers over the past decade or so regarding the role of the government in the development process. Indeed, it is now becoming conventional wisdom that government can no longer be a dominant player in economic activities, but rather should restrict itself to providing an “enabling” environment within which the private sector can take the lead and flourish. More specifically, government intervention in the economy has to be designed carefully so as to support the private sector and not inhibit its development. The general acceptance of this paradigm is evident in the steadily declining importance of government activities in the economies of most of the developing world. But does this new paradigm mean that government investment has no role whatsoever in affecting growth in developing countries? Reality is that public investment still represents a large share of total investment in the majority of developing countries, and the question is what role it plays in relation to private investment in stimulating economic growth. The objective of this paper is to ascertain empirically for a large group of developing countries the relative importance of public and private investment in promoting and sustaining growth.

scholarly journals Is the Private Sector more Productive than the Public Sector?

1991 ◽  
Vol 30 (4II) ◽  
pp. 721-729
Author(s):  
Khwaja Sarmad
Keyword(s):  
Developing Countries ◽  
Public Sector ◽  
Private Sector ◽  
Public Investment ◽  
Empirical Work ◽  
Empirical Support ◽  
Private Investment ◽  
Total Production ◽  
The Public ◽  
The Government

In developing countries the rapid growth of the public sector during the past few decades was viewed as an important means for accelerating the pace of economic growth. In most developing countries the public sector now accounts for a prominent share of total production and investment. But the contribution of the public sector to growth has been much below expectations. In many cases public enterprises require large subsidies from the government and impose a significant fiscal burden on the economy, which leads to the notion that the private sector is much more productive than the public sector. However, little empirical work has been done in this field so that the proposals that emphasize the private sector vis-a-vis the public sector rest largely on theoretical considerations. Recent work by Khan and Reinhart (1990) is an important exception. Using cross-section data for the seventies of 24 developing countries they show that the arguments favouring the private sector in adjustment programmes have empirical support. Khan and Reinhart estimate a growth model in which the effect of private and public investment on growth is separated. A comparison of the marginal productivities of the two types of investment allows them to conclude that "all in all, there does seem to be some merit in the key role assigned to private investment in the development process by supporters of market -based strategies". [Khan and Reinhart (1990), p. 25.]

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 THE ROLE OF FOREIGN INVESTMENT ON ECONOMIC GROWTH OF PAKISTAN: AN EMPIRICAL ANALYSIS FOR THE PERIOD OF 1976 – 2016

2018 ◽  
Vol 1 (2) ◽  
pp. 57-65
Author(s):  
Majid Ali
Keyword(s):  
Economic Growth ◽  
Private Sector ◽  
Time Series Data ◽  
Private Investment ◽  
Series Data ◽  
Significant Variable ◽  
Private Sector Investment ◽  
The Government ◽  
Public And Private Sector ◽  
Adf Test

The paper aims to examine empirically the nexus between foreign direct investment, domestic investments and economic growth in Pakistan by using time series data. An OLS technique is used to analyze the relationship between FDI, Public & Private investment, Personal remittances with gross domestic products panning from 1976-2016. For a data to be stationary, ADF test has been used and validated that all variables are stationary at level. Results of the study shows that both public and private sector investment are positively related with GDP but Public sector investment have an insignificant effect on GDP, while FDI found inversely and insignificantly correlated with GDP. Personal remittances (PR) relate negatively and have a significant impact on GD. Private investment are found to be the most significant variable which can effect GDP, showing that private investment can fueled economic growth of Pakistan. Hence, the Government of Pakistan needs to formulate such a policy frame work, which focuses on private sector investment in order to enhance economic growth.

scholarly journals The Effect of Labor, Private Investment and Government Investment on Productivity in the Industrial Sector

2021 ◽  
Vol 1 (1) ◽  
pp. 50-60
Author(s):  
Aryati Arfah
Keyword(s):  
Financial Management ◽  
Production Capacity ◽  
Secondary Data ◽  
Private Investment ◽  
Industrial Sector ◽  
Linear Regression Method ◽  
Economic Activities ◽  
Government Investment ◽  
The Government ◽  
Sector Data

This research was conducted with the objectives is to determine the effect of labor, private investment, government investment on production in the industrial sector. Data collection was carried out at the Regional Financial Management Agency Office. The data used in this study is secondary data, namely data on the number of workers, private investment, and government investment. As well as data on the amount of production in the industrial sector within ten years is analyzed and processed by the multiple linear regression method, using the SPSS version 22 program. The results of this study indicate that: (1) labor has a positive and significant influence on production in the industrial sector; (2) private investment has a positive and significant impact on production in the industrial sector; (3) government investment has a positive and significant impact on production in the industrial sector. This shows that production activities in the industrial sector in Sidenreng Rappang Regency rely on labor, private investment, and government investment to continue to increase production capacity. Government investment is a variable that is rarely examined, especially related to production. The government is one of the parties that play an essential role in supporting economic activities in the region.

scholarly journals A Summary of the Developments Regarding the Economic Regime Implemented in Developed and Developing Countries

2013 ◽  
Author(s):  
Özlen Hiç
Keyword(s):  
Developing Countries ◽  
Private Sector ◽  
Developed Countries ◽  
The Other ◽  
Economic Activities ◽  
Role Of Government ◽  
Public Investments ◽  
The Government ◽  
Economic Regime

Since the developments regarding the economic regime in developed countries follow a different path as opposed to those in developing countries, in this article, these two groups of countries will be examined separately. Priority will be given to investigating the economic regime in developed countries due to historical and theoretical reasons. Today, both in developed and developing countries the economic activities basically are taken up by the private sector; nevertheless the government contributes to these activities through intervention, guidance, protectionism, and investment. Still the level of government intervention, protection and public investments in developed countries appears to be at the minimum. The role of government in developing countries, on the other hand, seems to be more significant; the gravity of the government’s role depends on the degree of development for the countries concerned. In the countries where the level of development is low, the role of government increases, that is to say, the improvement in development decreases the role government.

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 Government Spending and Economic Growth in Cameroon

2018 ◽  
Vol 14 (28) ◽  
pp. 68
Author(s):  
Donald Djatcho Siefu ◽  
Martin Njocke ◽  
Neba Cletus Yah
Keyword(s):  
Economic Growth ◽  
Government Spending ◽  
Public Investment ◽  
Private Investment ◽  
Government Investment ◽  
Public And Private ◽  
Role Of Government ◽  
The Public ◽  
Investment Spending

Today, the role of government spending which is considered as the main instrument in the promotion of economic development is seen in the public investment budget (PIB). This study analyzes the role of the public investment spending in the economic growth of Cameroon. Specifically, it brings out the effect of Public and Private Investment on GDP growth in Cameroon. The role of the PIB as an instigator of economic growth should be clarified in order to justify government investment expenditure. Many studies have analysed the relationship between government spending and economic growth but the analysis of the composition of government spending and induced economic growth is an aspect of economic analysis which deserves more interest. This study analysis the effect of government investment spending on economic growth in Cameroon going from the components of the GDP5 and using VAR (Vector Auto Regressive) model. Our results show the intervals in which the various components of government spending have an effect on economic growth in Cameroon. We find that the lagged GDP and government investments have a positive effect on growth whereas private investments affect it negatively.

CORRELATION BETWEEN TAX POLICY AND CORRUPTION IN THE LEGAL PERSPECTIVE FOR COUNTRY'S ECONOMIC GROWTH

2017 ◽  
Vol 1 (2) ◽  
pp. 205
Author(s):  
Gideon J. ◽  
Edgar H. ◽  
Ivan I. ◽  
Nabil N. ◽  
Aptina A. ◽  
...  
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Tax Evasion ◽  
Tax Policy ◽  
Public Awareness ◽  
Transparency International ◽  
Tax Amnesty ◽  
Legal Perspective ◽  
State Income ◽  
The Government

<p>People Tax is the main source of state income. The better the tax policy of a country, the better the development of a country. One of the factors that influence the level of public awareness in paying taxes is corruption. Study shows that tax collection is one of them influenced by corruption. In the data of Corruption Perceptions Index 2016 reported by Transparency International, Indonesia is ranked 90 out of 176 countries. Tax evasion is a serious problem for many countries. Every year, the government loses revenue potential as many residents evade taxes in various ways. For this reason, the government implements tax amnesty. Tax amnesty is designed to permanently reduce the amount of underground economy activity, thereby increasing tax revenues in the future and developing countries can grow well.</p>

Public Financing of Human Development in India: A Review

2021 ◽  
Vol 15 (1) ◽  
pp. 62-81
Author(s):  
Sacchidananda Mukherjee ◽  
Shivani Badola
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Human Development ◽  
Public Investment ◽  
Public Financing ◽  
Economic Activities ◽  
Economic Opportunities ◽  
Goods And Services ◽  
Public Transfers ◽  
Distribution Of Resources

Role of public financing of human development (HD) is inevitable, especially for developing countries like India where access to resources and economic opportunities are not equitably distributed among people. Governments aim to achieve equity in distribution of resources through allocative and redistributive policies whereas macroeconomic stabilisation policies aim to achieve higher economic growth and stability in the price level. Expenditure policies of the governments envisage in delivering larger public goods and services to enable people to take part in economic activities by investing in human capital and infrastructure developments. Progressivity of the tax system helps in achieving equity by redistribution of resources among people. Being merit goods, expenditures on education, health, and poverty eradication make it a case for public investment which empowers people to improve human capital. The benefit of universal economic participation is expected to contribute in larger mobilisation of public resources over time. Lack of economic opportunities and earning a respectable income may increase dependence on public transfers which may reduce fiscal space of the governments to finance programmes to promote overall economic growth. The objective of this article is to review existing studies on public financing of HD in India and highlight emerging challenges.

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