Public investment and economic growth

Abstract

This article uses an extension of Mankiw, Romer and Weil's augmented Solow-Swan growth model to examine whether public investment has a distinct role as a determinant of economic growth. It considers both the predictions of the model in steady state and in transition to steady state. For the steady state model, there is no significant effect from public investment on the level of output per worker. Using standard ordinary least squares (OLS) methods for the transition model, it observes a significant contribution to economic growth from public investment. When instrumental variables methods are used, however, the associated standard errors are much larger and the contribution of public investment is statistically insignificant.

Determinants of adaptation costs in procurement: an empirical estimation on Italian public works contracts

“…11 The effects of infrastructures on economic growth are extensively investigated in the literature (see, Milbourne et al, 2003;Wilhelmsson and Wigren, 2009). 12 Flyvbjerg et al (2002) provide a similar definition for cost overruns, which is the other term usually encountered in this literature: "actual costs minus estimated costs in percent of estimated costs", where estimated costs are those forecasted at the time of the decision to realize the project.…”

Public Private Partnerships for Transportation Infrastructure Delivery

“…The study conducted by Canning and Fay [2] sustains this view by demonstrating that investments in infrastructure increase the growth of productivity. Similarly, Milbourne et al [3] underlined a positive impact of public investment in transportation in the economic growth. However, due to the chronic budgetary problems, many countries look for financial help in the private sector by establishing different kinds of cooperation [4].…”

Compositional Changes in Public Expenditure and Economic Growth: Time Series Evidence from Pakistan

“…Some studies (see for instance, Costa, Ellson, & Martin, 1987;Deno, 1988) that employed the production function approach arrive at the conclusion that public investment is not only an important ingredient of the production process, but also complements to the private investment. Milbourne, Otto, and Voss (2003) making use of the Mankiw, Romer, and Weil's augmented Solow-Swan growth type model, observe no significant impact of public investment on the level of output per worker in the steady state while find significant effect of public investment on economic growth in transition to the steady state.…”