Public Investment Expenditures Research Articles

Macroeconomic Determinants of Foreign Direct Investment Inflow in Laos

This study aims to study macroeconomic determinants of foreign direct investment inflow in Lao PDR, which includes macroeconomic variables such as gross domestic product growth rate (GDPGRO), government investment spending (GI), exchange rate (EXR), inflation rate (IFR), interest rate (IR), openness trade (OPTR) and money supply (MS) from 2001-2022. This results found that: The foreign direct investment inflow has 12,298.57 million US dollars on an average per year is equal to 559.03 million US dollars and has an average growth rate of 4.73% per year, for the public expenditure used to investment is increasing every year with an average growth rate of 10.96% per year. The exchange rate of kip per US dollar has an increasing trend but overall there is a growth rate equal to 1 digit only in 2022 there is a growth rate equal to 2 digits which is equal to 45.94%. For the inflation, the growth rate is 6.33% per year, which is the year with the lowest inflation rate is 2017 which is equal to 0.83% and the year with the highest inflation rate is 2022 which is equal to 22.96%, The decreasing trend in which the year with the highest interest rate on US currency loans is 2002 which is equal to 13.5% and the year with the lowest interest rate on US currency loans is 2011 which is equal to 8.15%, the open trade has an increasing trend. The year with the highest increase in 2021 is equal to 77.91% of GDP and the money supply is increasing every year. For the analysis of macroeconomic factors to foreign direct investment, it was found that the economic growth rate of gross domestic product (GDPGRO), public investment expenditure, the exchange rate of kip per US dollar and the money supply have a positive coefficient and reject the null hypothesis with a statistical significance level of 0.01 and 0.05 indicates that it is a doubtful factor for foreign direct investment to increase. Meanwhile, the inflation rate has a negative coefficient and rejects the null hypothesis at a statistical significance level of 0.05, which is a factor that reduces foreign direct investment transfers. For the interest rate in dollars and the open trade, there are accepted null hypothesis, it shows that there is no effect on the transfer of foreign direct investment.

The Impact of Public Investment Expenditures on Economic Growth in Türkiye

Bu çalışmada, Türkiye ekonomisinde 2012Q1:2022Q3 dönemi için genel yönetim bütçesinden yapılan kamu yatırım harcamalarının ekonomik büyümeye etkisi ARDL analizi ile araştırılmıştır. Araştırmanın ampirik bulguları, Türkiye’de hem uzun hem de kısa dönemde kamu kesimi tarafından genel yönetim bütçesinden yapılan yatırım harcamalarının ekonomik büyümeyi olumlu yönde etkilediğini göstermektedir. Uzun dönemde genel yönetim yatırım harcamalarında meydana gelecek %1’lik değişim ekonomik büyüme üzerinde %0,28’lik pozitif yönlü bir değişime neden olmaktadır. Ayrıca, nedensellik testi sonuçları genel yönetim bütçesinden yapılan yatırım harcamaları ve ekonomik büyüme arasında çift yönlü nedensellik ilişkisinin varlığını göstermiştir. Bu sonuçlar, Türkiye ekonomisinde tamamlayıcılık (crowding in) etkisiyle kamu yatırımlarının ekonomik büyüme üzerindeki olumlu etkisine işaret etmektedir.

THE EFFECT OF PUBLIC INVESTMENT BUDGET EXECUTION ON ECONOMIC GROWTH IN CAMEROON: A BUDGETARY SIGHT

In 2009, the Cameroonian authorities adopted a long-term development vision, one of the major challenges being strong and equitably distributed growth. Now in the second phase of this vision, the problem of growth remains with the same sensitivity. In an attempt to achieve the growth target, set out in the National Development Strategy, they have placed particular emphasis on monitoring the implementation of the PIB. This article discusses the implications of PIB implementation for economic growth in Cameroon. Using ARDL modelling on quarterly data from 2012 to 2020, we show that the increase in public investment expenditure execution results into a growth deterioration in the first quarter, but from the third quarter onwards we start to see an improvement in growth of 0.057 points following a one-point increase in public investment expenditure execution. It is therefore recommended to put in place a strategic committee be set up to monitor and follow up on the recommendations made at the various PIB monitoring meetings, with the goal to subsequently improve the level of execution in order to benefit from these effects on economic growth.

AN UNSTOPPABLE AND NAVIGATING JOURNEY TOWARDS DEVELOPMENT REFORM IN COMPLEX FINANCIAL-ECONOMIC SYSTEMS: AN INTERVAL ANALYSIS OF GOVERNMENT EXPENSES (PAST, PRESENT, FUTURE)

Purpose – The world is facing unprecedented opportunities to improve welfare and reduce poverty, so every day more and more public spending is becoming important in every country. The purpose of the research was prompted by the questions of whether there were development reforms and what is the complexity that has evolved in each variable (WS, GS, EU, ST, CE, and TE) for the time interval 2007–2020. How and are governing bodies able to continuously drive growth for decades by being more efficient users of government spending planning in complex financial and economic systems? Therefore, this paper aims to understand and advance by bringing a new approach to unstoppable and navigating reforms to government spending in complex financial and economic systems. Research methodology – The research was conducted through secondary data from annual financial reports and statements for both central and local levels. The time interval for 14 years was analyzed through two analyses and one matrix such as descriptive analysis (9 tests), correlation analysis (3 tests), and Proximity Matrix (Euclidean Distance between years and variables, Z stress test) as in the Tables (1–12), in the Figures (1–11) using SPSS version 23.0 for Windows. Findings – The findings showed that: a) the data had a normal distribution, b) there was an increase in expenditures for each year, especially in times of pandemic COVID-19, c) the data were obtained from financial reports and statements as well as different institutions over different years, d) there is a strong and positive relationship between the variables for government spending in complex systems, e) Public expenses have increased due to COVID-19 and the damage caused is continuing, affecting the decline in the well-being of the residents. Research limitations – The limitations of this paper are that only a considerable number of variables are studied and only in the state of Kosovo for 14 years (2007–2020). In this case, for other analyses by other researchers’ other variables can be analyzed, more extended periods or comparability with other states. Practical implications – based on the above questions, it was confirmed that there were reforms in the complex financial and economic systems for government expenditures each year. Originality/Value – Such research has not been analyzed before and the findings of this research can help budget experts to accurately plan expenses based on the three periods studied (past, present or the period of the Covid-19 pandemic and the future or the post-COVID-19 pandemic period). It is strongly recommended that governing bodies develop and improve the category of public investment expenditures.

The Effect of Public and Private Sector Fixed Capital Investments on Gross Domestic Product and Employment in Turkey

Purpose: The aim of this study is to analyze the effects of public and private sector investments on gross domestic product (GDP) and employment econometrically with the panel data method in order to determine the efficiency of investments in Turkey.
 Design/Method/Approach: In the study, the possible effects of public and private sector investments on GDP and employment in Turkey are examined by dividing them into sectors. Sectors are included in the analysis as agriculture and other non-agricultural sectors. Since the data of various sectors within a certain time period are used, time series and horizontal cross-sectional data are analyzed using the panel data method, which allows them to be used together. Four different models are created in the research. Among them, the effects of public investment expenditures on GDP in the period of 2004-2020 in Model 1, private investment expenditures on GDP in the same period in Model 2, public investment expenditures on employment in the period of 2014-2021 in Model 3 and private investment expenditures on employment data in Model 4 are investigated.
 Findings: The results obtained from the analyses show that public and private sector investments have a significant and positive impact on GDP and employment in Turkey.
 Practical Implications: It is generally accepted in the public finance literature that investments will positively affect economic growth, production level, employment and regional development if they are used in productive areas.
 Originality/Value: What makes this study different from others is that the relationship of public and private sector investments with both GDP and employment is analyzed separately. In this way, a comparison can be made from the point of public and private sector investments in Turkey in terms of the contribution of investments to both GDP and employment, and an answer can be sought to the question of how correct the policy of increasing the share of the private sector in investments, especially in recent years, is in Turkey.
 Research Limitations/Future Research: This study will make a significant contribution to the literature on the economic effects of public and private sector investments. It will be determined how accurate the idea of increasing the share of private investments in Turkey in recent years is. According to the results obtained from the study, new studies will be conducted on what can be done to increase the efficiency of public or private sector investments.
 Disclaimer: This article was produced from the doctoral thesis prepared by Özgür Mustafa Ömür at Bursa Uludağ University Social Sciences Institute, Department of Finance, under the supervision of Prof. Dr. Filiz Giray.
 Paper Type: Empirical
 JEL Classification: E01, E22, E24, H54

Public Investment and Regional Resilience: Empirical Evidence from the Greek Regions

AbstractThis paper examines empirically the contribution of public investment expenditures to regional resilience. Analysis is based on a novel dataset including public investment expenditures data decomposed by sub‐categories and disaggregated at NUTS III Greek regions over the period 2000–2017. Results indicate that public investment expenditures had a positive influence on regional resilience during the period of the economic crisis. Decomposing public investment expenditures by type the analysis provides evidence that the decentralized public investment expenditures that were executed through the tiers of local government and those that were related with the secondary and tourism sectors asserted a positive and significant impact on regional resilience. These results are signifying the importance of public policy in regional resilience and could be utilized for the formulation of regional policy during recessions.

Impact of macroeconomic and microeconomic variables on firm investment: Mexican service sector, 2000-2016

A large and positive relationship is found to exist in the long-run between Public Investment Expenditures and Firm Investment which shows that public investment crowds in private investment using ARDL model at macroeconomic level on the Mexican service sector over the period 2000-2016. I also use the system-GMM PVAR to analyse the impact of microeconomic variables on firm investment. Exports have a strong and positive impact while Imports have a large and negative impact on firm investment. At the microeconomic level, taxes payments slightly obstruct firm investment. Using impulse response functions, I find that long-run macroeconomic policies are more important than short-run macroeconomic policies and that macroeconomic policies are more important than microeconomic policies for firm’s investment decisions.

Interregional social development differences and regional social development determinants in Turkey

In this study, the relationship is investigated between the regional human development index and public investment expenditures, terrorist attacks and population density for 12 regions of Turkey. For each region, the Human Development Index method of calculation which is prepared by the United Nations Development Program is used to calculate the regional human development index. In this study, the model is developed to analyze the relation between variables, estimated by the common correlated effects (CCE) approach. For the analyses, firstly all the stationarity of series is investigated by the cross-sectionally augmented dickey fuller test which is considered to have cross-sectional dependence. After the stationarity test, the existence of a cointegration relation between variables, is tested with the Durbin-H test, and the findings obtained from the test showed the presence of a cointegration relation among the series. After confirming a cointegration relation, long-term parameters are estimated by the CCE model. Findings from the CCE test showed that the effect of the variables on the regional human development index was not statistically significant in the general model. On the other hand, regional results showed that the effects of variables were statistically significant in some regions and that these effects vary according to regions. With this study, it is aimed to identify the differences in social development in Turkey and the determinants of regional development. The findings and recommendations are also considered to be beneficial for countries in similar social and economic situation with Turkey.

Effect of Tax and Debt Financed Government Expenditure on Economic Growth in Kenya

This study aims at analyzing the effect of tax and debt-financed government expenditure on economic growth in Kenya using time series data from 1980-2014. Vector Error Correction Model (VECM) was used to analyze the data. The empirical findings showed that public investment expenditure financed by issuing debt has positive effect on economic growth. The results also indicated that financing government consumption expenditure using debt has negative effect on economic growth. With regards to tax revenue, the results indicated that tax financed public consumption spending affects economic growth negatively. Moreover, the results showed financing government investment expenditure using tax revenue promotes economic growth. Based on the findings, this study therefore recommends fiscal authorities in to use borrowing to finance investment expenditure as opposed financing consumption spending. Additionally, given the adverse effects of debt-accumulation on growth performance, policy makers should focus more on domestic revenue mobilization to finance government expenditures.

Impact of Public Expenditure and Quality of Institutions on Private Investment in CEMAC’s Countries

Impact of Public Expenditure and Quality of Institutions on Private Investment in CEMAC’s Countries HAKIZIMANA Jacques Abstract Private investment as a vehicle for growth and employment has been a major concern in recent years. This article analyzes the impact of public spending and the quality of institutions on private investment in CEMAC. The results of an econometric analysis using a spatial Durbinmodel (SDM) with random effects show that public investment expenditure, consumption and the quality of institutions have a positive impact on private investment in CEMAC.These results have made it possible to reformulate the implications of economic policies that go in the direction of strengthening public expenditure and improving the quality of institutions. Full Text: PDF DOI: 10.15640/jeds.v8n3a3

Empirical Investigation on the Impact of Public Expenditures on Inclusive Economic Growth in Morocco: Application of the Autoregressive Distributed Lag Approach

Today more than ever, the international institutions (the IMF, the World Bank, the OECD and the UN) as well as the public authorities are interested in questions related to the development issue in general, and more particularly to inclusive growth. The reason is that in most developing countries, such as Morocco, the increase in economic growth does not necessarily and automatically have an effect on poverty and social disparities reduction. In this context, the study aims to analyse the impact of public expenditures, in particular the human capital development expenditure (education and health) and the public investment, on inclusive economic growth in Morocco through the use of the autoregressive distributed lag (ARDL) model on annual macroeconomic data from 1980 to 2018 and the bounds cointegration test of Pesaran. The results of the estimates show that, in the long term, public investment expenditures positively contribute to economic growth. Furthermore, they revealed that strong government action on human capital development expenditures is the most powerful instrument for enhancing inclusive economic growth in Morocco.

Improving Public Infrastructure in the Philippines

This paper explores the macroeconomic effects of improving public infrastructure in the Philippines, modeling the infrastructure scale-up plan being implemented by the current administration. After benchmarking the Philippines’ level of infrastructure investment, quantity and quality of public infrastructure, and public investment efficiency relative to its neighboring countries, the analysis uses a dynamic general equilibrium model to quantitatively assess the macroeconomic implications of raising public investment expenditure with different financing schemes and different rates of public investment efficiency. Critically dependent on a model structure in which accumulation of publicly provided infrastructure raises the overall productivity of the economy, the model simulations show that (i) increasing public infrastructure investment results in sustained gains in output, (ii) the effects of improving public investment efficiency are substantial, and (iii) deficit-financed increases in public investment lead to higher borrowing costs that constrain output increases over time. These results underscore the importance of improving public investment efficiency and revenue mobilization.

The Impact of Financing Instruments in the Evolution of the Productive Structure of Total Public Expenditure in Jordan during 1980-2013

This study aims to analyze the evolution of the productive structure of public spending in Jordan and the role of some of the financing instruments to influence them based on annual data for public spending and structure of the production of current and investment expenditures of public variables are supported and a number of independent variables of (local revenue, foreign aid, foreign loans, loans interior, foreign direct investment) and a series of time stretching from 1980 until 2013, the study results indicates that the current spending ratio occupied two-thirds of total public expenditure in the eighties, while investment spending accounted for only one-third , And then taken the current spending rate of an upward trend to reach more than three-quarters of the total public expenditure in the 1990s and the beginning of the third millennium of the twenty-first century, while the proportion of investment spending less than a quarter during the same period, the results of the unit root test showed that all variables stabilized at the first difference. After the Johansen test of Co-integration, it was found that there is a long-term equilibrium relationship between the variables within the model and the Granger's causality test that there is a causal relationship and one direction between external loans with total public expenditure (domestic revenues and external loans with public investment expenditure) and (current spending with internal loans . In addition, domestic revenues, foreign aid, external loans, internal loans, foreign direct investment (FDI) had a positive effect on (total public expenditure, public investment expenditure, public current expenditure), Excluding external loans had a negative impact on current public spending , and by a significant value (T) it was found that domestic revenues played a large role in determining the level of total public spending and public investment expenditure, while internal loans played a large role in determining the level of public current expenditure

Efficiency of Cuts in Various Taxation Rates to Foster Economic Growth in a Framework of Wages Rigidity

We use a simple DSGE model with prices and wages rigidities to evaluate the efficiency of various fiscal policies intended to sustain economic activity and growth. We show that a fiscal policy aiming at reducing the tax burden would be all the more efficient as wages are more flexible. Besides, a decrease of the capital taxation rate appears as the most efficient fiscal policy. Indeed, it would decrease the capital cost, and it would foster private and public investment, but also private and public consumption. Wages rigidities would then reduce the inflationary tensions due to this economic growth. In comparison, a decrease of the consumption taxation rate increases private consumption, and all other components of global demand; however, economic growth is then more limited than with a decrease of the capital taxation rate. Finally, a decrease of the labor taxation rate would increase private investment and consumption and public expenditure exactly in the same proportions, but it would be much less efficient than the previous policies in order to sustain economic growth. Besides, it would favor public consumption expenditure, whereas the decrease of consumption or capital taxation rates would mainly promote the most productive public investment expenditure.

The contribution of Cohesion Funds and nationally funded public investment to regional growth: evidence from Greece

ABSTRACT This paper sets out to estimate the contribution of European Union co-financed and nationally funded public investment expenditures to regional growth in Greece during the period 2000–14. The results are sensitive to the time period and the geographical level of the interventions. While nationally funded projects boosted the growth performance of the regions before the eruption of the economic crisis, there is no indication that the European Union co-financed projects have led to increased growth. The results question the additionality and coordination between European Union Cohesion Policy and the domestic regional policies for the promotion of regional growth in the less well-off regions of Europe.

Expenditure Conditionality in IMF-supported Programs

This paper studies the impact of expenditure conditionality in IMF programs on the composition of public spending. A granular dataset on different government expenditure conditions covering 115 countries for the 1992-2016 period is compiled. The results support the view that while conditionality on specific elements of spending could help achieve a program's short-term objectives, it is structural conditionality which delivers lasting benefits. Structural public financial management conditionality (such as on budget execution and control) has proven to be effective in boosting the long-term level of education, health, and public investment expenditures. The results further indicate that conditionality on raising such spending may come at the expense of other expenditures. Finally, the successful implementation (and not mere existence) of the conditionality is crucial for improved outcomes. These findings are relevant for policy makers targeting achievement of the Sustainable Development Goals (SDGs).

Expenditure Conditionality in IMF-Supported Programs

This paper studies the impact of expenditure conditionality in IMF programs on the composition of public spending. A granular dataset on different government expenditure conditions covering 115 countries for the 1992-2016 period is compiled. The results support the view that while conditionality on specific elements of spending could help achieve a program’s short-term objectives, it is structural conditionality which delivers lasting benefits. Structural public financial management conditionality (such as on budget execution and control) has proven to be effective in boosting the long-term level of education, health, and public investment expenditures. The results further indicate that conditionality on raising such spending may come at the expense of other expenditures. Finally, the successful implementation (and not mere existence) of the conditionality is crucial for improved outcomes. These findings are relevant for policy makers targeting achievement of the Sustainable Development Goals (SDGs).

El dilema de la política económica en Honduras para resolver el alto nivel de desempleo

La causa del alto nivel de desempleo en Honduras es la deficiente demanda agregada, que afecta el crecimiento económico del país y conduce a un proceso deflacionario. Para resolver este problema y generar ingreso para amplios sectores de la población, se requiere que el PIB real crezca entre el 6% y 8% anual en forma sostenible, estable y equitativa, por un periodo de diez años consecutivos.La solución de este problema está en el Modelo Keynesiano, estimulando la demanda agregada, a través de política económica expansiva, bajando impuestos y tasas de interés, aumentando el gasto público en inversión y devaluando el Lempira. Sin embargo, el contexto económico actual de la economía hondureña hace que, aunque se tengan los instrumentos, no puedan ser aplicados, porque primero hay que resolver los grandes desequilibrios macroeconómicos causados por el exagerado gasto público corriente y la corrupción.Actualmente, y con el acompañamiento del FMI, se está aplicando una política económica contractiva de corte neoliberal, basada en políticas que estimulan la oferta agregada en vez de la demanda. Lo paradójico es que las políticas contractivas que se están adoptando en vez de reducir el desempleo, lo están aumentando, con lo cual se agrava el problema. Pero, el gran dilema de la política económica hondureña, es que, en el corto plazo, no hay otra opción. Tan pronto como se lograra estabilizar la economía, se podría aplicar el Modelo Keynesiano basado en políticas expansivas, que sí favorecerían una disminución en el desempleo.

Intergovernmental Transfers and Expenditure Arrears

Local governments may increase expenditure arrears to relax the financial constraints induced by intergovernmental transfer cuts. We assess this hypothesis using information from accounting and financial reports from Italian municipalities for the period 2003-2010. By exploiting the long-lasting effect of the 1977-1978 structural reform of Italian local public finance, we employ an instrumental variable approach to address endogeneity concerns. We find robust empirical evidence that the lower the intergovernmental grants, the larger the use of arrears in public investment expenditures by municipalities. We argue that, when local governments are not subject to effective controls on the formation of arrears but fiscal rules impose binding budget constraints, a cut in intergovernmental transfers can partially diminish the effectiveness of fiscal consolidation at local level.

Liberals, Socialists, and pork-barrel politics in Greece

This paper analyses the role of pork-barrel politics in the allocation of public investment expenditures in Greece. It proposes a model which explicitly relates the allocation of public investment to electoral results using a unique dataset covering the period from the restoration of democracy in 1974 until 2009, just before the Great Recession that radically transformed the political panorama of the country. The analysis includes 10 legislative periods marked by governments of the two parties that dominated the political arena in Greece: the Liberal and the Socialist Party. The results show that Socialist and re-elected governments applied more expansionary fiscal policies relative to Liberals. The two main parties also used different tactics when it came to pork-barrelling: while the Socialists when in government rewarded/groomed their electoral fiefs, the Liberals invested in areas controlled by the opposition to win over new votes or seats.