Tag Archives: Public Investment

Size and Growth of Public Investment in Nigeria: Implications for Real Sector Development (Published)

This paper offers empirical evidence linking public investment to real sector development in Nigeria during 1981-2017. It specifically employed autoregressive distributed lag (ARDL) model to analyze the impacts of public investment in economic, social and community services and gross public investment as a ratio of GDP on agricultural and manufacturing value added. . The short run result showed that public investment in economic, social and community services impact positively on agricultural value added in the short run. The positive impact of investment in social and community services economic services was greater than that of economic services by a margin of 0.027 percent. This suggests that investment in human capital formation such as education and healthcare delivery seems to provide greater opportunity for agricultural development. Additionally, public investment in economic services also exerts significant positive impact on manufacturing value added. The result further showed that gross capital expenditure as a ratio of GDP impact positively on agricultural and manufacturing value added in the short run. It was evidence from the result that its impact on agricultural value added was stronger in the long run. Accordingly, it is recommended that policy makers should step up investment in social and community services in order to improve human capital required for real sector development in Nigeria.

Keywords: Agricultural Value Added, GDP, Manufacturing Value Added, Public Investment, Real Sector

Interfaces between Road Infrastructure and Poverty in Africa: The Case of Malawi, 1994-2013 (Published)

Critical assessment on the correlation between public investment on road infrastructure and poverty was carried out, and therefore this research paper provides an in depth analyses of the linkage between road infrastructure and poverty, as well as, other relevant macro economic variables used in the Malawi Growth and Development Strategy (MGDS) as target indicators. Using primary and secondary data from 1994-2013, dynamic time series models were applied in elaborating the various factors with thrust on road infrastructure that may influence poverty in Malawi. Noting poverty reduction as priority of Malawi Government’s development agenda since the early 1990s, MGDS provides the country’s socioeconomic growth and development platforms. According to the latest 2010 Integrated Household Survey (IHS3), the majority of Malawians (50.7 percent) are languishing in abysmal poverty; this level is remotely far from the MDGS target of 27 percent by end 2015.  The country has a high inequality index (Gini 0.38) reflecting profound inequalities in access to assets, services and opportunities across the population. The distribution of the benefits of economic growth is also important for the alleviation of poverty. However, the distribution of income and wealth are highly skewed, with a majority of the population living in a state of absolute poverty. Based on NSO surveys (1998-2010), the poorest 20 percent of the population control only around 10 percent of national consumption implying inequality is not decreasing at all for long time. Hosts of factors explaining why poverty level continues to be rampant are: share of agricultural as a percent of GDP (proxy to agricultural production) and export as percent of GDP (proxy to exports). However, this paper findings show that there is significant (p=0.000<0.05) relationship between road network and poverty levels. Estimates from Granger Causality analysis indicate that for one percent increase in road network, a reduction of 7.2 percent in poverty level is perhaps achievable. Average inflation rate over the last 20 years stands at 22.41 percent, and this has an immense impact on poverty level since it dramatically reduces the purchasing power of the majority of the population. For a one percent increase in the inflation rate, there is a consequence of about 3.7 percent increase in the average poverty level. Average Gross Domestic Product (GDP) growth rate is 4.7 percent annually with a minimum of -4.9 percent and a maximum of 10.2 percent in the last 20 years. Poverty level appears to significantly respond to (GDP). There is a 4.27 percent reduction in poverty level if a one percent GDP increment takes place as shown in the dynamic time series analysis. In fact, the declining of agricultural production for export and the growing gap in balance of payment (average Malawi Kwacha -498.92 billions or approximately US$1.1 billion) would immensely influence GDP negatively and therefore poverty becomes abysmal as GDP growth plummets. In a nutshell, the findings confirm that in the long run economic growth is the key to alleviation of extreme poverty since it creates the resources to raise incomes. Given the importance of agriculture in contributing towards GDP in Malawi, the positive impact that this sector has on poverty is evident. For agriculture to meaningfully impact economic growth, road infrastructure plays a great role. Other pro-poor variables such as development roads and other investment on infrastructure are vital for economic growth and hence poverty alleviation. 

Keywords: Granger Causality, Infrastructure, Malawi, Poverty, Public Investment, Vector Autoregression

Effect of Public Investment on Economic Growth in Bangladesh: An Econometric Analysis (Published)

Public investment traditionally holds the main structure of any economy. We consider annual development programme (ADP) is the main proxy for public investment in Bangladesh and also consider the gross capital formation for more reliable results. The link among GDP, PI and GCF are analyzed by our regression model, Ordinary Least Squares (OLS) method was used in estimation and we apply different statistical tools in order to know different statistical properties such as, we have used Ramsey’s RESET test for finding model misspecification. We also used the Jarque-Bera test for normality, Breusch-Pagan-Godfrey and White test for heteroscedasticity, the Durbin-Watson d test and the Breusch- Godfrey Serial Correlation LM Test for correlation, and Likelihood Ratio and the Wald test as specification. The variables were subjected to different unit root tests (ADF, PP, and KPSS) to justify stationary status. Though variables were non-stationary, the cointegration test (Engle Granger, CRDW, Johansen test) was conducted for long-run equilibrium as well as we use different types of tests to find out more reliable results. In addition, we checked the Granger Causality. From our study, we have seen that PI has positive effects on GDP in Bangladesh. According to our result, there is a positive impact of public investment on economic development. Findings point out that keeping the high public investment level in Bangladesh together with improvement in institutional surroundings would be beneficial for economic growth

Keywords: Co-Integration Test, Jarque-Bera Test, Public Investment, Unit Root Test, economic growth

PUBLIC INVESTMENT STATUS IN BANGLADESH (Published)

This paper endeavors to formally establish a link between public investment and economic growth. Public investment is one of the key factors of economic development. It is often seen as important ingredient for economic growth in developing countries like Bangladesh. The main purpose of the study is to investigate the impact of public investment on economic growth in Bangladesh. I also examine the public investment of Bangladesh. We consider ADP is the main proxy for public investment in Bangladesh. We also consider the gross capital formation for more reliable results. In our country, ADP traditionally holds the central place in our national economic planning. ADP regularly promotes economic growth, ensures infrastructural development, reduces poverty and improves the environment. The link among GDP, PI and GCF are analyzed by our regression model. From our study, we have seen that PI has positive effects on GDP in Bangladesh. So, in the light of that result, increases in public investment should have a positive net impact on economic growth which augments our economic development in future. This thesis concludes with a number of policy recommendations arising from the research findings.

Keywords: ADP, GCF, GDP, Public Investment, economic growth