Efficiency-Adjusted Public Capital and Growth
IMF Working Papers, September 1, 2011
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Bibliographic details
- Authors: Sanjeev Gupta, Alvar Kangur, Abdoul A Wane, Chris Papageorgiou
- Published: September 1, 2011
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781463903503.001
Overview
- Authors: Sanjeev Gupta, Alvar Kangur, Abdoul A Wane, Chris Papageorgiou
- Publication date: September 1, 2011
- Series: Working Paper No. 2011/217
- Issue: 217
- Pages: 35
- DOI: https://doi.org/10.5089/9781463903503.001
- Core objective: Construct an efficiency-adjusted public capital stock series and re-examine the public capital and growth relationship for 52 developing countries.
Key findings
- Public capital is a significant contributor to economic growth.
- The estimated coefficient for the income share of public capital is larger in middle- than in low-income countries.
- The marginal product of public capital is larger in low-income countries than in middle-income countries (the opposite pattern from the income-share coefficient).
- Quality of public investment, measured by variables capturing the adequacy of project selection and implementation, is statistically significant in explaining variations in economic growth.
- The statistical significance of public investment quality in explaining growth is mainly driven by low-income countries.
Methodology highlights
- Constructed an efficiency-adjusted public capital stock series for empirical analysis across 52 developing countries.
- Used variables capturing adequacy of project selection and implementation to measure public investment quality.
- Applied econometric analysis to re-examine the public capital–growth relationship (specific estimation techniques and model specifications are described in the paper).
Policy implications and recommendations
- Improvements in the quality of public investment (project selection and implementation) can materially affect economic growth outcomes, especially in low-income countries.
- Policy attention should focus not only on the quantity of public capital but also on efficiency and implementation processes to raise the growth contribution of public investment.
Subject classifications and keywords
- Subjects: Capital productivity, Econometric analysis, Estimation techniques, Expenditure, Financial institutions, Labor, Production, Public investment spending, Stocks
- Keywords: appraisal, Capital productivity, Estimation techniques, evaluation of public investment, growth accounting, ICRG investment profile, implementation, investment effort, investment process, management process, process carry, production function, public capital, Public capital stock, public investment efficiency, Public investment spending, selection, Stocks, WP
Source: IMF Working Papers — "Efficiency-Adjusted Public Capital and Growth", Working Paper No. 2011/217 (September 1, 2011).
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