The Quality of Public Investment

Shankha Chakraborty, Era Dabla-Norris
2009 IMF Working Papers  
This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. This paper develops a growth model with specialized goods where inefficient and corrupt bureaucracies interact with the provision of public investment services in
more » ... stment services in affecting the productivity of private capital, specialization, and growth. The model provides potential explanations for the contradictory empirical results on the effects of public investment found in the literature as well as for the role of the quality of public infrastructure investment in creating a gap between rich and poor countries. From a policy perspective, the paper suggests that the link between public investment and growth depends critically on the quality and efficiency of public capital. JEL Classification Numbers: O11, O43, D73
doi:10.5089/9781451873016.001 fatcat:xohwfjgoxbg7zee75pcq76gcvy