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.