Publication:
Assessing the Effect of Public Capital on Growth: An Extension of the World Bank Long-Term Growth Model

Simple item page
dc.contributor.authorDevadas, Sharmila
dc.contributor.authorPennings, Steven
dc.date.accessioned2018-10-16T18:42:00Z
dc.date.available2018-10-16T18:42:00Z
dc.date.issued2018-10
dc.description.abstractTo analyze the effect of an increase in the quantity or quality of public investment on growth, this paper extends the World Bank’s Long-Term Growth Model (LTGM), by separating the total capital stock into public and private portions, with the former adjusted for its quality. The paper presents the Long-Term Growth Model Public Capital Extension (LTGM-PC) and accompanying freely downloadable Excel-based tool. It also constructs a new Infrastructure Efficiency Index (IEI), by combining quality indicators for power, roads, and water as a cardinal measure of the quality of public capital in each country. In the model, public investment generates a larger boost to growth if existing stocks of public capital are low, or if public capital is particularly important in the production function. Through the lens of the model and utilizing newly-collated cross-country data, the paper presents three stylized facts and some related policy implications. First, the measured public capital stock is roughly constant as a share of gross domestic product (GDP) across income groups, which implies that the returns to new public investment, and its effect on growth, are roughly constant across development levels. Second, developing countries are relatively short of private capital, which means that private investment provides the largest boost to growth in low-income countries. Third, low-income countries have the lowest quality of public capital and the lowest efficient public capital stock as a share of gross domestic product. Although this does not affect the returns to public investment, it means that improving the efficiency of public investment has a sizable effect on growth in low-income countries. Quantitatively, a permanent 1ppt GDP increase in public investment boosts growth by around 0.1-0.2ppts over the following few years (depending on the parameters), with the effect declining over time.en
dc.identifierhttp://documents.worldbank.org/curated/en/701811539089110745/Assessing-the-Effect-of-Public-Capital-on-Growth-An-Extension-of-the-World-Bank-Long-Term-Growth-Model
dc.identifier.doi10.1596/1813-9450-8604
dc.identifier.urihttps://hdl.handle.net/10986/30569
dc.languageEnglish
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 8604
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo
dc.subjectLONG-TERM GROWTH
dc.subjectPUBLIC INVESTMENT
dc.subjectINFRASTRUCTURE INVESTMENT
dc.subjectPUBLIC CAPITAL
dc.titleAssessing the Effect of Public Capital on Growthen
dc.title.subtitleAn Extension of the World Bank Long-Term Growth Modelen
dc.typeWorking Paperen
dc.typeDocument de travailfr
dc.typeDocumento de trabajoes
dspace.entity.typePublication
okr.crossref.titleAssessing the Effect of Public Capital on Growth: An Extension of the World Bank Long-Term Growth Model
okr.date.disclosure2018-10-09
okr.doctypePublications & Research
okr.doctypePublications & Research::Policy Research Working Paper
okr.docurlhttp://documents.worldbank.org/curated/en/701811539089110745/Assessing-the-Effect-of-Public-Capital-on-Growth-An-Extension-of-the-World-Bank-Long-Term-Growth-Model
okr.guid701811539089110745
okr.identifier.doi10.1596/1813-9450-8604
okr.identifier.externaldocumentum090224b086414859_1_0
okr.identifier.internaldocumentum30482900
okr.identifier.reportWPS8604
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/701811539089110745/pdf/WPS8604.pdfen
okr.statistics.combined5089
okr.statistics.dr701811539089110745
okr.statistics.drstats4488
okr.topicPublic Sector Development::Public Financial Management
okr.topicInfrastructure Economics and Finance::Infrastructure Economics
okr.topicInfrastructure Economics and Finance::Infrastructure Finance
okr.topicMacroeconomics and Economic Growth::Economic Theory & Research
okr.unitDevelopment Research Group, Development Economics
relation.isAuthorOfPublication83daf4e9-5061-5f1f-b16b-68116394433c
relation.isAuthorOfPublication.latestForDiscovery83daf4e9-5061-5f1f-b16b-68116394433c
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
Files
Original bundle
Now showing 1 - 2 of 2
Thumbnail Image
Name:
WPS8604.pdf
Size:
1.11 MB
Format:
Adobe Portable Document Format
Download
No Thumbnail Available
Name:
WPS8604.txt
Size:
335.32 KB
Format:
Plain Text
Download
License bundle
Now showing 1 - 1 of 1
No Thumbnail Available
Name:
license.txt
Size:
1.71 KB
Format:
Plain Text
Description:
Download
Collections
Policy Research Working Papers