PUBLIC MEETS PRIVATE: UNRAVELING THE DYNAMICS OF INFRASTRUCTURE INVESTMENT IN SOUTH AFRICA

During the late 1970s and early 1980s, many African countries experienced a profound slowdown in economic growth. The growth rate of real per capita GDP fell from 0.4% per year during the 1973-80 period to 1.2% per year during the 1980-89 period.' The causes-internal and external-of Africa's economic decline and the strategies for restoring economic growth are much debated. Nevertheless, broad consensus has emerged on the importance of (i) increasing total investment and (ii) promoting private-sector development and increasing its share of total investment for long-term growth.2 It is widely recognized that gross domestic investment fell substantially in Africa during the 1980s and remains severely depressed across the region. The proportion of total domestic investment in GDP fell from 20.8% per year during 1973-80 to 16.1% per year during 1980-89. In some countries, investment has fallen to less than 10% of GDP-a level that is insufficient even to replace depreciated capital. In Africa, the minimum investment needed to replace depreciated capital is estimated at 13% of GDP.3 In recent years, there has also been a growing recognition among many African leaders, faced with new realism and pragmatism, that the private sector could play a significant role in economic development. The focus in the longer term of structural adjustment programs and sectoral reforms adopted by these countries is on creating more appropriate incentives and a framework for private-sector development as the basis for achieving sustainable economic growth. In addition, multilateral and bilateral institutions have developed new initiatives with priorities for private-sector development. In 1989, the International Finance Corporation, an affiliate of the World Bank, es-

This paper provides new evidence to contribute to the current debate on the relative impact of public and private investment on economic growth and the crowding effect between the two components of investment in South Africa. Using annual data from 1970 to 2017, the study applies the recently developed Autoregressive Distributed Lag (ARDL)-bounds testing approach to cointegration. The study finds that private investment has a positive impact on economic growth both in the long run and short run, while public investment has a negative effect on economic growth in the long run. Further, in the long run, gross public investment is found to crowd out private investment, while its infrastructural component is found to crowd in private investment. The results of the study also reveal that both gross public investment and non-infrastructural public investment crowd out private investment in the short run. Overall, the study finds private investment to be more important than public investment in the South African economic growth process and that the importance of infrastructural public investment in stimulating private investment in the long run cannot be over-emphasized.

The study has estimated the extent of investment made in promotion of marketing infrastructure in the country and growth in public and private investments. It has also examined state-wise spread of private and public investments in agricultural marketing infrastructure, its composition and share and has investigated whether private investment induces pubic investment or vice versa. Of the total investment of Rs 157652.30 lakh made for the development of agricultural marketing infrastructure, Madhya Pradesh has accounted for the maximum (36%) share, followed by Tamil Nadu (18%) and Andhra Pradesh (13.5%). West Bengal has accounted for the lowest share. The analysis has indicated that there is a strong complementarity between private and public investments and as soon as private investment comes, public investment also starts pouring in. On investigating whether public investment is dependent on private investment or vice versa, the study has revealed that private investment induces public investment. The study has further indicated that in agricultural marketing infrastructure, private investment has taken a lead, which is a welcome change because private investment is more efficiently used as compared to public investment. To give further fillip to private investment in agricultural marketing infrastructure, the study has provided certain suggestions.

PurposeThe purpose of this paper is to examine the crowding-in or crowding-out relationship between public and private investment in India.Design/methodology/approachThe autoregressive distributed lag (ARDL) bounds testing approach is used to estimate the long run relationship between public and private investment using annual data from 1971-1972 to 2009-2010.FindingsBased on the empirical findings, it is observed that aggregate public investment has a positive effect on private investment both in the long run and the short run. In contrast to the findings of previous studies, no significant impact of public infrastructure investment on private investments is found in the long run, while non-infrastructure investment has a positive impact on private investment in the short run. Among the various categories of infrastructure sector, a positive and significant impact in the case of electricity, gas and water supply is observed. Similarly, the result indicates that public investment in machinery and equipment and construction have substantially influenced the private sector machinery and equipment in the long run and the short run. In the case of the role of macroeconomic uncertainty, the results find a negative and significant impact on private investment and the impact is higher in the short run than in the long run.Originality/valueThe present study extends the literature in three important ways: First, the study attempts to capture heterogeneity of public investment as well as disaggregate effects of two different categories of public infrastructure on private investment. The extent to which two different types of public assets impact the private investment in machinery and equipment investment is also examined. Second, ARDL model is used to examine the long-run relationship between public and private investment. Third, the study incorporates macroeconomic uncertainty into the empirical analysis to examine the role of macroeconomic volatility in determining private investment decision.

This study explored the interaction between private and public investments and its effect on economic growth in Nigeria over the period 1986 to 2021. The analysis utilized annual time series data, including real Gross Domestic Product (GDP), private investment (proxied by gross fixed capital formation), public investment (proxied by government capital expenditure), exchange rate, and interest rate spread. The Autoregressive Distributed Lag (ARDL) Bounds Testing approach was employed to examine the existence of both short-run and long-run relationships among the variables. The objective was to assess the effect of the interaction between private and public investment on economic growth. The empirical results revealed that the model variables were cointegrated, suggesting a stable long-term equilibrium relationship. Furthermore, the interaction between private and public investments were found to have a statistically significant impact on economic growth in both the short run and the long run, highlighting the complementary nature of these investment types. The study recommends that government policy should focus on enhancing the synergy between public and private investment through the provision of critical infrastructure at reduced economic costs. Also the creation of a business-friendly environment fosters sustainable economic growth in Nigeria.

This study examines the dynamic effects of public and private investments on India’s economic growth, focusing on disaggregating public sector investments into infrastructure and non-infrastructure Gross Fixed Capital Formation (GFCF). Key questions include: How do public infrastructure and non-infrastructure investments impact economic and private sector growth? What roles do Foreign Direct Investment (FDI), labour force participation, and the real interest rate play in shaping economic growth? The study uses the Autoregressive Distributed Lag (ARDL) model to analyze 40 years of macroeconomic data from 1980–81–2019–2020, offering insights into both short- and long-term effects. Findings reveal a crowding-out effect of public infrastructure investment on private investment in the short term but a crowding-in effect in the long run. FDI, labour participation, and the real interest rate significantly influence GDP growth, confirming their roles as critical drivers of economic expansion. Disaggregating public investments shows infrastructure and non-infrastructure investments play distinct roles in shaping economic outcomes. This study contributes by addressing the gap in understanding how different types of public investments affect private sector activity in India and broadens investment analysis by incorporating FDI, labour participation, and the real rate of interest, offering new evidence for research and policy formulation.

South Africa has a low investment-to-GDP ratio compared to other developing countries. The share of government investment in the total investment has also been declining. In this context, the paper uses quarterly data from 1960 to 2005 to analyse the nature and relationship between public and private investment in South Africa. The findings of the study have strong policy implications and indicate that although public investment is not “crowding in/out” private investment, it exerts an indirect impact on private investment through the accelerator effect. Hence an increase in government spending on infrastructure and social sectors is likely to enhance private investment in the country. Therefore a more proactive fiscal policy is suggested to increase the investment-GDP ratio which can stimulate higher growth rates. Key words: Crowding in/out, public investment, infrastructure.

This study examines the impact of public investment on private investment in South Africa using the autoregressive distributed-lag (ARDL) and nonlinear ARDL bounds testing approach for the period from 1980 to 2018. The ARDL results show that public investment crowds in private investment in the long and short run. The NARDL results indicate that the negative shock in public investment leads to a decrease in private investment in the long and short run. The results show that public investment has an asymmetric impact on private investment in South Africa. The study recommends that government increase investment in infrastructure such as energy, roads and railways, among others, in order to promote private investment.

This study performs an examination on the impact of public and private investment on economic growth and the crowding effect of public investment on private investment in Zimbabwe from 1970 to 2014. The study utilised the newly developed autoregressive distributed lag-bounds testing approach with better small sample properties than the traditional cointegration techniques. The results show that public investment has a higher short-run growth impact, but in the long run the private investment-led growth is more important. In addition, while gross public investment crowds out private investment, infrastructural public investment has a long-run crowding in effect. A non-infrastructural public investment was also reported to have a short-run crowding out effect on private investment. The results suggest that the productivity of public and private investment in Zimbabwe can be improved by cutting back on non-infrastructural public investment to basic minimum level while stimulating the growth in infrastructural public investment.

The study examines the relationship between private and public investment in Zimbabwe utilizing yearly time series data for the period 1970 to 2007. Emphasis is placed on the direction of causality and the effect of the two types of investment on each other. The paper constructs empirical models for both private and public investment, based on the flexible accelerator theory. Private investment is found to be cointegrated with public investment. A cointergration approach and VEC model are employed to assess the short run relationship existing between public and private investment. The relationship between private and public investment is found to be insignificant and the direction of causality found to be unidirectional. The results support the notion that private investment precedes public investment.

Public investment in APBN annually budgeted as capital expenditure. However, public investment not only in the form of physical capital but also in the non-physical forms of human resources that can be looked at education expenditure and health expenditure that called as human capital. The purpose of this study is to provide empirical evidence about causality that occurred between public expenditure and private sector investment in Indonesia with 33 provinces over the study period 2010-2013. The statistical tool used in this study is the Three-stage Least Squares from E- Views. Results of this study indicate that there are causal relationship between public investment in infrastructure and private investment and between public investment in infrastructure and public investment in human resources. However, no causal relationship occurs between the public investment in human resources and private investment. As a control variable, GDP has positive and significance effect on private investment.

To accelerate the GDP growth rate, the government of Bangladesh has been raising its public investment since late 2000s which is reflected in the rise of public investment-GDP ratio from 4.50% in 2008 to 6.90% in 2015. At the same time, private investment has remained stagnant since 2008, hovering around 22% of GDP. This trend of public and private investment suggests that public investment might have a crowding-out effect on private investment. Given this background, the main objective of this paper is to examine the relationship between public and private investment in Bangladesh over the period 1981-2015. To this end, we estimate a model in the autoregressive distributed lag bound testing framework using real private investment, real public investment, real GDP, and the real interest rate. In addition, since Bangladesh's trade and financial sectors went through intensive liberalization reform in the early 1990s, it warrants an investigation whether liberalization has any significant effect on the relationship between public and private investment. Hence, in this study, we pose an additional question of how the relationship between these two variables is affected by the liberalization of the financial and trade sectors - an issue received less attention in previous studies. To capture this effect, we extend our model by introducing a dummy variable for liberalization and an interaction term. Our results show that public investment negatively affects private investment both in the long run and short run, suggesting the existence of crowding-out. However, the crowding-out effect is partially neutralized by the favorable effect of liberalization. We also find that private investment is weakly sensitive to the real interest rate. These findings have important policy implications for both fiscal and monetary authorities. First, given the relatively large magnitude of crowding-out effect, it will be imperative for the fiscal authority to select those investment projects which have greater productivity and spillover effects so that crowding-out effect can be minimum. Second, the weak sensitivity of private investment to the interest rate points to a weak interest rate channel of monetary policy. Therefore, interest rate cut may not be successful in promoting private investment during economic down-turn. Third, as liberalization moderates the crowding out effect, Bangladesh can reap more benefit from public investment by removing the impediments to trade and financial deregulations.

We study the macroeconomic effects of public and private investment in 17 OECD economies through a VAR analysis with annual data from 1960 to 2014. From impulse response functions we find that public investment had a positive growth effect in most countries, and a contractionary effect in Finland, UK, Sweden, Japan, and Canada. Public investment led to private investment crowding o ut in Belgium, Ireland, Finland, Canada, Sweden, the UK and crowding-in effects in the rest of the countries. Private investment has a positive growth effect in all countries; crowds-out (crowds-in) public investment in Belgium and Sweden (in the rest of the countries). The partial rates of return of public and private investment are mostly positive. Our results are robust to the ordering of private and public investment in the VAR.

Türkiye's healthcare system has undergone substantial changes since 2002, driven by public and private sector investments aimed at expanding capacity, improving service quality, and enhancing health outcomes. This study examined the causal effects of these investments on healthcare indicators such as hospital capacity, patient satisfaction, and mortality rates from 2002 to 2022 using data from the Ministry of Health, the World Bank, and TURKSTAT. Seventeen models were analyzed through the Toda-Yamamoto causality approach, focusing on variables like hospital beds, healthcare personnel, patient satisfaction, and economic factors such as GDP and the Consumer Confidence Index (CCI). Public health investments significantly increased beds in public hospitals (χ²=10.14, p=0.04), while private investments had a strong impact on beds in private hospitals (χ²=24.29, p<0.01). GDP also positively influenced the number of beds in both public (χ²=56.13, p<0.01) and private hospitals (χ²=59.01, p<0.01). Private investments were associated with increased healthcare personnel in the private sector (χ²=39.34, p<0.01), whereas public investments had no significant impact on public-sector personnel (χ²=1.06, p=0.59). GDP had a positive effect on patient satisfaction with public health services (χ²=22.31, p<0.01), and private investments correlated with higher satisfaction in private healthcare (χ²=24.29, p<0.01). Additionally, GDP significantly reduced infant mortality (χ²=34.70, p<0.01) and under-five mortality (χ²=41.55, p<0.01). Health investments were linked to lower mortality rates from cardiovascular disease, cancer, diabetes, and chronic kidney disease (χ²=32.39, p<0.01). The findings highlight the essential role of both public and private investments in enhancing Türkiye's healthcare system. Private-sector investment is especially critical for expanding capacity and improving satisfaction. Policies integrating economic growth with healthcare improvements and continuous investments in infrastructure and human resources are vital for sustaining progress.

The contention in the literature is the relative contribution of private and public investment on economic growth and whether the relationship is linear or non-linear. In addition, there is the issue of whether the impact of investment on economic growth changes depending on public and private investment Purpose. The study examines the relationship between investment (public and private) and economic growth in Nigeria over the period 1970-2016. Design/Methodology/Approach. The study employs Markov regime-switching approach developed by Hamilton (1989, 1990). Specifically, a multivariate dynamic Markov-switching model is estimated using maximum likelihood estimation techniques. The study employs annual time-series sourced from Central Bank of Nigeria, Statistical Bulletin and World Bank, World Development Indicator. Findings/Implications. The results show that the relationship between investment and economic growth is non-linear. Also, both public and private investments have a significant positive impact on economic growth. However, private investment contributes more to economic growth than public investment during the period of expansion. The reverse is the case during the period of contraction. The results support the basic neoclassical framework, with emphasis on savings and investment for analyzing long-term growth performance. Also, it is crucial to make a distinction between the impact of investment (public and private) on growth in two stages of growth. Originality. Government needs to be innovative by spending more during period of slump as more public investment will be required to pump prime the economy for increased private investment.