Is there a nonlinear relationship between public investment and private investment? Evidence from 21 <scp>Organization for Economic Cooperation and Development</scp> countries

Marcos, Sofia São; Vale, Sofia

doi:10.1002/ijfe.2712

Cited by 5 publications

(5 citation statements)

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“…Nigeria has long been categorized as an economy with minimal savings and even lower levels of investment, as highlighted by Marcus and Vale (2022). In an effort to break free from this cycle of low savings and low investment, the government has implemented a range of policies and reform initiatives.…”

Section: E-issn: 2959-9121mentioning

confidence: 99%

The Sovereign Wealth Fund and Nigerian Economic Development

Udo,

Uko,

Akpan

2024

EAFJ

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The study specifically investigated the impact of sub-national government sovereign wealth funds on the economic development of Nigeria. An ex-post research design was used for the study. Economic development was proxied by per capita income, while sovereign wealth funds were proxied by their three components: stabilization funds, future generation funds, and infrastructure funds. Data for the variables were obtained from the Central Bank of Nigeria for the period 2012–2022. An econometric approach was used to analyze the data. Findings showed that of the three components of SWFs, only future generation funds impact positively and significantly on economic development. In view of the findings, it is recommended that the government ensure effective and efficient management of the various funds by putting in place proper regulatory measures so as to attain the goals for which the funds were established.

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Section: E-issn: 2959-9121mentioning

confidence: 99%

The Sovereign Wealth Fund and Nigerian Economic Development

Udo,

Uko,

Akpan

2024

EAFJ

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“…As a result of competition for limited material and financial resources, a larger fiscal deficit brought on by increased public investment may also drive away private investment through high interest rates, credit restrictions, and increased current or future tax burdens on households. In other words, countries are unable to convert additional public investment into consistently high output growth when there is a lack of absorptive capacity [7].…”

Section: Introductionmentioning

confidence: 99%

“…Countries see increased private investment as a crucial factor in boosting productivity levels by expediting technological advancement and bringing down the unemployment rate as they move toward economic expansion. By producing new capital assets and boosting countries' production efficiency, it encourages long-term capital accumulation [7]. Since the private sector has continued to be one of the primary drivers of growth in contemporary economies all over the world, developing countries have given it more attention [12].…”

Section: Introductionmentioning

confidence: 99%

“…Nigeria has been categorized as an economy with low savings and even lower investment [7]. The government implemented a number of policies and reform initiatives, including the National Economic Empowerment and Development Strategy (NEEDS), privatization, and commercialization of federal and state-owned enterprises, to escape this low savings and low investment trap.…”

Section: Introductionmentioning

confidence: 99%

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Investment Indicators and Economic Growth in Nigeria: A Systematic Review

Yusuf

2024

Business, Management and Economics

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Most developing countries, including Nigeria, are stuck in a vicious cycle of low investment caused by insufficient domestic savings, resulting in inadequate capital formation and a large savings-investment gap. Given the significance of investment in poverty alleviation and economic growth, the study conducted a disaggregated analysis of various measures of investment in economic growth in Nigeria from 1981 to 2020. Using the conventional and structural break stationarity tests, as well as the Autoregressive Distributed Lag (ARDL) approach, the epistemological findings confirm a compelling co-integrating relationship among the study variables and show that credit to the private sector, domestic investment, economic liberalization, foreign portfolio investment, and interest rate have a significant positive impact on long-term growth, whereas foreign direct investment, capital expenditure, and inflation have a significant negative impact. Furthermore, the short-run results revealed that economic liberalization, private-sector credit, and portfolio investment all correlate positively with growth. In contrast, foreign direct investment, infrastructure spending, and inflation rate are profoundly negative. The study, therefore, advocated for effective fiscal and monetary policy coordination to lower the cost of doing business, incentivize and open up opportunities for domestic and foreign investors, increase infrastructure spending to create jobs, reduce poverty and sustain growth.

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“…Most economies and organizations providing aid to developing nations have as one of their primary goals the promotion of public investment with a high potential for economic return. Public investment is at the core of development strategies (Marcos & Vale, 2022), consists of additions to the national capital stock and is known to be one of the key variable items in government spending (Allain‐Dupré et al, 2012). A commonly adopted measure of public investment is gross fixed capital formation (International Monetary Fund [IMF], 2017; Sijabat, 2022).…”

Section: Introductionmentioning

confidence: 99%

Effect of bilateral and multilateral concessional debts on public investment in Africa: A contingency analysis

Ezeaku

Ugwunta

Ibe

et al. 2023

African Development Review

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The purpose of this paper is to evaluate the relative influence of bilateral and multilateral concessional debts on public investment in 32 sub-Saharan African countries over the period 1985-2020. Dynamic panel autoregressive distributed lag models comprising the mean group, pooled mean group and dynamic fixed effect estimators were employed in our model estimations. The results revealed that bilateral and multilateral concessional debts had a long-run positive and significant effect on public investment. The findings indicated that a 1% change in bilateral and multilateral concessional debt was associated with 8.6 and 11.3% increases in public investment, respectively. While the short-run influence of bilateral concessional debts was significantly positive, multilateral concessional debts had a short-run positive but insignificant effect on public investment. It is discovered that institutional quality is associated with declines in public investment. The contingency analysis shows that institutional quality explains a lot about how well bilateral and multilateral concessional debts drive public investment. The evidence suggests that poor institutional quality is more likely to undermine the effectiveness of bilateral concessional debts on productive investment than multilateral concessional debts.

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Is there a nonlinear relationship between public investment and private investment? Evidence from 21 Organization for Economic Cooperation and Development countries

Cited by 5 publications

References 67 publications

The Sovereign Wealth Fund and Nigerian Economic Development

The Sovereign Wealth Fund and Nigerian Economic Development

Investment Indicators and Economic Growth in Nigeria: A Systematic Review

Effect of bilateral and multilateral concessional debts on public investment in Africa: A contingency analysis

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