Private Investment and Economic Growth in Developing Countries
20 Pages Posted: 15 Feb 2006
Date Written: July 26, 1989
Despite the growing support for market-oriented strategies, and for a greater role of private investment, empirical growth models for developing countries typically make no distinction between the private and public components of investment. This paper sheds some light on this important issue by formulating a simple growth model that separates the effects of public sector and private sector investment. This model is estimated for a cross-section sample of 24 developing countries, and the results support the notion that private investment has a larger direct effect on growth than does public investment.
JEL Classification: 111
Suggested Citation: Suggested Citation