Relative effects of public versus private investment spending on economic efficiency and growth in developing countries

This study investigates the initial and long-run effects of public investment expenditure on economic growth, especially as compared with private investment. Annual data over 1970–90 for 48 developing countries form the basis of the empirical analysis. Our findings suggest that infrastructural public investment facilitates private investment, especially in the long-run. It also promotes economic growth and efficiency whereas non-infrastructural investment does the reverse. Also, long-term effects of public investment tend to be much more positive than short-term ones on growth; efficiency and private investments