Investing in Growth

4 Pages Posted: 16 Jul 2011

See all articles by Serkan Arslanalp

Serkan Arslanalp

International Monetary Fund (IMF)

Fabian Bornhorst

International Monetary Fund (IMF)

Sanjeev Gupta

International Monetary Fund (IMF) - Fiscal Affairs Department

Date Written: March 2011

Abstract

Policymakers in developing countries often point to insufficient infrastructure as a constraint on their countries’ growth prospects. But more important than whether a country can expand its public investment in infrastructure is whether it should. Unfortunately, the results of studies on public investment’s impact on growth are unclear, leading many to conclude that it is unproductive. This article revisits this debate and, using estimates of public capital for 48 advanced and developing economies during 1960–2001, finds that public investment generally has a positive impact on growth. Furthermore, the results indicate that advanced economies use public investment more as a demand management tool — to counter the business cycle — than do emerging and developing economies, where it is more likely used to boost long-term growth prospects.

Suggested Citation

Arslanalp, Serkan and Bornhorst, Fabian and Gupta, Sanjeev, Investing in Growth (March 2011). Available at SSRN: https://ssrn.com/abstract=1886487 or http://dx.doi.org/10.2139/ssrn.1886487

Serkan Arslanalp (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Fabian Bornhorst

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Sanjeev Gupta

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
69
Abstract Views
897
rank
422,268
PlumX Metrics