Share Of Public Investment Research Articles

Club Convergence: Do public investments play a role in regional income per capita convergence in Turkey?

This paper investigates club convergence in real GDP per capita in NUTS 2 level at Turkey from 2005 to 2019 by using Phillips and Sul (2009, 2007) procedure. After determining the initial clubs, to seek merging clubs we perform Phillips and Sul (2009) and Lyncker and Thoennessen (2017) procedure. As a result, we find 7 convergence clubs and one divergent club following Phillips and Sul (2009, 2007) and we don’t find any merging clubs following Phillips and Sul (2009) and Lyncker and Thoennessen (2017) procedure. After determining the convergence and merging clubs, this paper also scrutinizes the dynamic effects of public capital on regional convergence employing system generalized method-of-moments (System GMM) estimators. It has been concluded that from System GMM results, share of public investments in GDP do not have a significant role as a determinant of any clubs.

The impacts of public investment on return and economic growth by economic industry in Vietnam

This study empirically analyses the impact of public investment from government budget on economic growth by measuring the indirect effects of public investment on return and private investment in 16 economic industries from 1990 to 2016. The findings show the positive relationship between private investment and return on total assets by industry. Economic growth, the share of public investment in infrastructure and the share of public investment in education also have a positive impact on return on total assets by industry. However, total state sector investment has the negative effect on the return on total assets by industry. In addition, when observing after tax profit by industry, there appears that the share of total investment in GDP is positively affected by the share of manufacturing industry in GDP and labour productivity by industry.

State regulation of development of investment programs in the sphere of construction in the conditions of cyclicality of the economy

The article is devoted to determining the effect of cyclicality on the development of the Ukrainian economy and the implementation of state investment programs in construction.The purpose of the article is to substantiate the feasibility of state anti-cyclical regulation of construction through the implementation of state investment programs and to develop proposals for the structure and order of formation of the appropriate organizational and economic mechanism. To do this, the impact of cyclicality on the development indicators of the construction industry should be determined, and the nature of the relationship between Ukraine's GDP of construction and investment activity and the list of public investment programs related to construction should be considered. The main indicators chosen to determine the economic cycles are GDP, GDP of construction. The state investment programs, which are directly or indirectly related to construction, are reviewed, ways and methods of their state regulation are determined. State support for the implementation of investment projects is provided by: co-financing at the expense of the state budget, providing state guarantees in accordance with the law on credit funds for the implementation of investment projects, crediting at the expense of the state budget funds, offsetting from the state budget interest on loans necessary for the implementation of investment projects .The analysis of sources of financing of capital investments in Ukraine for the years 2002-2018 was carried out, we determined that the share of state and local budgets in the sources of financing was the largest in 2014 (15%), 2010, 2017 and 2018 (more than 10% ). Moreover, the share of public investments is gradually decreasing, while the financing of investment projects at the expense of local budgets increases annually.It is determined that increasing the financing of state investment programs at the bottom of the economic cycle can stimulate the growth of the economy in the next phase. State regulation of investment programs in the construction sector is an effective tool for counter-cyclical economic management.

Fiscal policy effectiveness and the golden rule of public finance

The present paper uses a dynamic stochastic general equilibrium (DSGE) framework with imperfect competition and nominal rigidities in order to analyze the impact of two different fiscal rules on the effectiveness of fiscal policy. The first rule is called the golden rule of public finance which allows an upward shift in the share of public investment in total public spending but restricts the use of public debt for investment purposes alone. The second rule does not alter the allocation of public spending among investment and consumption but allows public consumption to be financed by public debt. The numerical results show that a fiscal expansion under the golden rule leads to a higher increase in output while maintaining a low level of public debt compared to the second rule. Moreover, the difference between the output responses under the two fiscal rules increase in the medium run implying that the benefits of a golden rule-based fiscal policy are higher especially in the medium run.

Trend & Mind-Set that India’s Central Science & Technology Sector & Further Need

The ability to innovate and deploy globally competitive technologies has been recognized as the next key driver of global economic change in the emerging knowledge economy. While science is scholarship driven, technology and innovation are market and competition driven, respectively. Currently, Indian Research and Development landscape is largely influenced by the character of public funded research and selection of R&D priorities is mostly supply driven. The private sector investment into R&D have been marginal. Therefore, demand driven component of R&D goals has been limited. Policy, strategy and tools are required to stimulate larger investment into demand driven R&D goals. Energy sector invests far too into R&D, although industrial turn over in the sector is extremely high. Promotion of public- private partnership into R&D and clean energy is a critical component of India’s competitiveness in global trade and industrial growth. New strategies and tools are required to stimulate engagement of private sector into R&D and enhance the share of private sector investment from the current 26% of India’s R&D spend to at least 50% during the 2012-17 period. The larger share of public investments into R&D could also be leveraged by focusing of R&D for public and social ‘good priorities of the country. There is an un-tapped opportunity for India to emerge as a global leader in affordable innovations under PPP by focusing on R&D for public and social goods in the areas of agriculture and food security, water, energy, affordable health care, education, environment, renovation of urban infrastructure, S&T inputs to rural development etc. Residual idealism among the youth and vast talent base offer an opportunity for the R&D sector in: the country to gain leadership in affordable and social innovations. Coming five years should lead to the creation of an innovation ecosystem most suited to the developmental phase of the country. Such an ecosystem should be complete with new responses to risk averse nature of the society, delivery models for innovative deployment of technologies, business models for financing deployment of innovations and adjustments in governance and management models for supporting strategic goals of innovations. The approach for R&D sector should address all’ stages of life cycles of ideas; from creation to commercialization and value creation. Thiswould call for paradigm shifts in approaches of planning for R&D in India during the Twelfth Five Year Plan period.

Government expenditure multiplier under the zero lower bound: The role of public investment

Under the zero lower bound the stimulating policies are conducted mostly by the fiscal authorities due to inefficiency of the traditional monetary policy. Recent research showed that in the borrower-saver framework the government expenditure multiplier can be significantly higher under the zero lower bound than under a positive interest rate. This paper explores the fiscal multiplier in the excess-savings liquidity trap in the extended framework which incorporates productive along with utility-enhancing government expenditures. The share of public investment in total expenditures and its productivity decrease the multiplier under the zero lower bound and increase it under a positive interest rate. In the former case, the higher share of liquidity-constrained borrowers weakens the negative effect of public investment, with an opposite impact in the latter case. An assumption about the two types of public expenditures intensifies the non-linear impact of the borrowers' share on the multiplier: the multiplier can become negative under zero lower bound for the sufficiently high share of borrowers.

Trends in the regional allocation of public investment in the post-bubble Japanese economy

With reference to the assumptions presented by Yamano and Ohkawara (J Reg Sci 40:205–229, 2000) on the specification of a production function with region-specific individual effects on public capital, this paper introduces a new benchmark index in order to analyze the Japanese government’s investment allocation policy across subnational regions, with an emphasis on efficiency, equity, and/or redistribution under trade-off restrictions. This index, termed the equity–growth allocation share of public investment herein, is derived from a conventional Solow growth accounting approach. Specifically, it is defined as a region’s share of the periodic change in the nation’s public capital, where its growth contribution with its interregional spillover effects to overall output growth is the same across subnational regions. We apply this index to the post-bubble Japanese economy, which was beset by efficiency–equity trade-offs between Tokyo’s unipolar development and balanced growth given a prolonged recession. We find a shift from a pro-efficiency to a non-pro-efficiency allocation policy in the mid-1990s. This finding therefore rules out the inference that the government chose an inverse policy direction thereafter and instead implies that it rather attempted to balance efficiency and redistribution.

Generational Accounting with Feedback Effects on Productivity Growth

Gerbert Hebbink estimates generational accounts for the Netherlands. He presents a baseline scenario according to the standard generational accounting approach, in which constant productivity growth is assumed in the future. Forecasts for the traditional deficit and debt measures computed with the generational accounting model are also provided. The deficit would gradually increase. The debt would first decline and then substantially increase. Hebbink departs from the standard approach by introducing a link between the share of public investment in GDP and productivity growth: a policy that shifts expenditure from transfers to investment would increase productivity growth and reduce intergenerational imbalances. However, the link does not significantly affect the results: even doubling the ratio of public investment to GDP would not be sufficient to make fiscal policy sustainable.

PUBLIC CONSUMPTION AND THE STABILIZATION OF PEACE AFTER A CIVIL WAR

The risk of war tends to be very high in the first few years that follow the end of a previous conflict. This paper is concerned with the potential contribution of fiscal policy to post-conflict peace stabilization. Drawing on a simple theoretical representation of the post-conflict interaction between two contending parties, the paper explores the empirical relationship between public consumption, fiscal balances, and the risk of war in a sample of African economies. Results suggest that higher government consumption is associated with a higher risk of returning to war. A possible interpretation of this finding is that by increasing the share of public investment today, governments increase the future value of the peace dividend. The benefits of this investment will be enjoyed by all parties only to the extent that peace persists. Therefore, a higher share of public investment increases parties' incentive to maintain peace.

Growth, lobbying and public goods

The possibility that the benefits of lobbying may spill over to other members of society is incorporated into an endogenous growth framework to show that an increase in lobbying may improve welfare and growth even when motivated by self-interest. This case arises when the social benefits of such spillovers dominate the adverse effects of lobbying (e.g., more taxes to pay for policies). In general, however, the decentralized economy grows less than is socially desirable as agents lobby either too much or too little. Rent seeking is a special case of overlobbying where spillovers are absent and, thus, agents always overlobby from a social point of view. Also, the decentralized economy's propensity to lobby increases with the share of public investments in national income.

Changes in Regional Economy

The Central Research Institute of Electric Power Industry (CRIEPI) has developed a multiregional econometric model covering the nine regions of Japan to analyze the impacts of the national economy and fiscal policies on the regional economy. This model is called the JNREM (Japanese Nine-region Econometric Model). The model is multi-sectoral and linked with the national model developed by CRIEPI. The JNREM determined local output, investment, consumption, employment, wages, unemployment, population, electricity demand and so forth. With the other models of CRIEPI such as the World Energy Market Model, the Japanese Macro-economic Model and the Japanese Energy Model, the JNREM can offer the comprehensive prediction of Japanese regional economies which is consistent to that of the national economy, energy demand and the world energy market.The model has the following characteristics. First, it is multi-sectoral so that not only economic behavior of each region is analyzed by sector but interaction among sectors in each region is treated. Second, the JNREM is so cautiously built that it is possible to determine all endogenous variables for the national economy and the regional economies. This property is especially important in forecasting the behavior of interregional migration and of manufacturing investment. Third, the capital utilization rate is employed in manufacturing production to reflect adjustment process in the manufacturing sector. The ratio of actual demand for electricity (kilo-watt hours) to the contracted amount of electricity (kilo-watts) is used as a proxy for the capital utilization rate. Fourth, in sharp contrast with the previous multiregional models of Japan, regional unemployment is explicitly included in the model. This enables us to analyze the adjustment process of demand-deficient unemployment, which is sensitive to business fluctuations in local labor markets along the Phillips-type wage equation. Finally, the model reflects the differences in the production structures across sectors. Manufacturing outputs are mainly determined by supply-side factors such as capital and labor inputs, and technical progress. On the other hand, demand-related factors such as consumption and housing investment mainly determine outputs in the tertiary and construction sectors.For the period from 1985 to 2005, simulation analysis of four scenarios is carried out wiht the JNREM to examine the behavior of the entire model and impacts on regional economies of key exogenous variables such as oil prices, regional price index, and regional allocation of public investment. The impacts of these exogenous variables are examined in comparison to the standard scenario which is based on the forecasting results of CRIEPI's macro-economic model and the world energy model.In the standard scenario, Kanto has the highest growth rates of gross product and population. Compared with the standard case, high energy cost decreases output growth in each region. Concentration of labor and capital in the Tokyo metropolitan area, which is depicted in the model as rapid rise in price index of Knato, diminishes labor migration from other regions to Kanto, and reduces the difference in income between Kanto and others. The increase in regional share of public investment for preipheral regions narrows earnings and unemployment gaps between peripheral and central regions. However, intensive allocation of public investment to peripheral regions brings about less national production, and this indicates the trade-off between efficiency in terms of the national economy and equity among central and peripheral regions in terms of economic defferences between two groups of regions.