Public Education Expenditure and Other Determinants of Private Investment in the Caribbean

28 Pages Posted: 15 Feb 2006

See all articles by Benedict Clements

Benedict Clements

International Monetary Fund (IMF) - African Department

Joaquim Levy

Ministry of Finance, Brazil (on leave)

Date Written: October 1994

Abstract

This paper presents an analysis of the determinants of private investment in the Caribbean region, using data for the 1977-91 time period. Drawing on the endogenous growth literature, a model is developed to capture the impact of public education expenditure on private sector capital formation. The implications of this model are tested in the context of an econometric model assessing the impact of education and other variables on the share of private investment in GDP. The empirical results reveal that public education outlays, as well as economic growth, have a significant effect on private capital formation. Public investment has a negative effect on private investment, while real interest rates and external debt burdens are found to have no statistically significant impact on private investment.

JEL Classification: E22, H52, 054

Suggested Citation

Clements, Benedict and Levy, Joaquim, Public Education Expenditure and Other Determinants of Private Investment in the Caribbean (October 1994). IMF Working Paper No. 94/122, Available at SSRN: https://ssrn.com/abstract=883864

Benedict Clements (Contact Author)

International Monetary Fund (IMF) - African Department ( email )

1700 19th Street, NW
Washington, DC 20431
United States

Joaquim Levy

Ministry of Finance, Brazil (on leave) ( email )

Rio de Janeiro
Brazil

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