Bouton, LawrenceSumlinski, Mariusz A.2013-06-172013-06-172000-060-8213-4785-3https://hdl.handle.net/10986/13986This discussion paper examines in its first part, the role of private investment in economic growth. While theoretical growth models developed in the economics literature, make no distinction between private, and public components of investment, there is an emerging appreciation that private investment is more efficient, and productive tan public investment. Results from the recent empirical literature, updated here with the recent data on private investment, suggest that private investment has a stronger association with long run economic growth than public investment. The second part shows trends in private, and public fixed investment in fifty developing countries. On average, the ratio of private investment to GDP continued its upward trend, reaching record levels in 1998, the most recent year for which comparable data exist. That year, average private investment reached 14.3 percent of GDP, but public investment, fell to only 7.0 percent of GDP, its lowest level since 1974.en-USCC BY-NC-ND 3.0 IGOADVERSE CONSEQUENCESALLOCATIVE EFFICIENCYANNUAL GROWTHAVERAGE ANNUAL GROWTHBASIC EDUCATIONCAPITAL ACCUMULATIONCAPITAL STOCKCAPITAL-OUTPUT RATIOCOMPETITIVE ENVIRONMENTCOMPETITIVE MARKETSCOMPETITIVE PRESSURESCONSTANT RETURNSCONSTANT RETURNS TO SCALECOUNTRY GROWTHCROSS- COUNTRY GROWTH REGRESSIONSDATA SETSDEBTDEVELOPED WORLDDEVELOPING COUNTRIESDEVELOPING WORLDDEVELOPMENT EFFORTSDEVELOPMENT REPORTDIMINISHING RETURNSDISEQUILIBRIUMECONOMIC DEVELOPMENTECONOMIC FACTORSECONOMIC GROWTHECONOMIC PERFORMANCEECONOMIC POLICYECONOMICSECONOMICS LITERATUREECONOMICS PROFESSIONECONOMISTSELASTICITIESELECTRICITY GENERATIONEMPIRICAL GROWTH LITERATUREEMPIRICAL LITERATUREEMPIRICAL RESEARCHEMPIRICAL RESULTSEMPIRICAL WORKENDOGENOUS GROWTHESTIMATED COEFFICIENTEXOGENOUS FACTORSEXPENDITURESEXTERNALITIESFACTOR ACCUMULATIONFACTORS OF PRODUCTIONFINANCIAL ASSISTANCEFOREIGN DIRECT INVESTMENTGDPGNPGOVERNMENT REGULATIONGROWTHGROWTH ACCOUNTINGGROWTH LITERATUREGROWTH MODELSGROWTH PROCESSGROWTH RATEGROWTH RATESGROWTH REGRESSIONSGROWTH THEORYHIGH GROWTHHUMAN CAPITALINCOME COUNTRIESINCOME LEVELSINDUSTRIALIZED COUNTRIESINDUSTRIALIZED WORLDINTELLECTUAL PROPERTYINVESTMENTINVESTMENT RATEINVESTMENT RATIOLABOR FORCELABOR REGULATIONSLEVEL OF CAPITALLEVEL OF OUTPUTLONG RUNLONG-RUN GROWTHMARGINAL COSTMARGINAL PRODUCTIVITYMARGINAL RETURNMARKET ECONOMIESMARKET ECONOMYMEMBER COUNTRIESMONOPOLY RENTSNEOCLASSICAL GROWTH MODELNET INVESTMENTOILOIL PRICEOUTPUT GROWTHOUTPUT RATIOPATENTSPER CAPITA GROWTHPER CAPITA INCOMEPER CAPITA INCOME LEVELSPOLICY ENVIRONMENTPOPULATION GROWTHPRIVATE INVESTMENTPRIVATE INVESTORSPRIVATE SECTORPRODUCTION FUNCTIONPRODUCTIVITYPRODUCTIVITY OF CAPITALPUBLIC GOODPUBLIC INVESTMENTPUBLIC SECTORRAPID GROWTHREFORM EFFORTSRELATIVE IMPORTANCERELATIVE PRICESSURPLUS LABORTECHNICAL PROGRESSTECHNOLOGICAL CHANGETECHNOLOGICAL CHANGESTECHNOLOGICAL INNOVATIONTECHNOLOGICAL PROGRESSTECHNOLOGY TRANSFERTELECOMMUNICATIONSTOTAL FACTOR PRODUCTIVITYTOTAL FACTOR PRODUCTIVITY GROWTHTOTAL OUTPUTTRANSITION COUNTRIESUNEMPLOYMENTWorld Bank10.1596/0-8213-4785-3