From Public Infrastructure to National Economic Growth: Do Systematic Investment Practices Matter?
This paper investigates the path effects of systematic government investment on national growth. We build a theory where government investment practices, along with other institutional variables, affect the quality of a country’s core public infrastructure sys-tem. This, in turn, positively affects national productivity. Using the path analysis meth-od, we test our theoretical framework on a sample of data drawn from 25 developing economies during the period from 1990 to 2000. The results suggest that a unit increase in systematic public investment practices indirectly enhances national productivity with an increase of about $10-$15 in a country’s real per capita GDP through the better condition and service capacity of a country’s core public infrastructure.
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