Do Public and Private Project Infrastructure Expenditure in States Contribute to the Economic Growth of Nation? Evidences from India

2019 ◽  
Vol 67 (1-2) ◽  
pp. 9-29
Author(s):  
J. C. Edison ◽  
Harish Kumar Singla
Keyword(s):  
Economic Growth ◽  
Gross Domestic Product ◽  
Service Sector ◽  
Private Investment ◽  
Dynamic Panel Data ◽  
Domestic Product ◽  
Regression Equations ◽  
Dynamic Panel ◽  
Public And Private ◽  
Power Construction

The purpose of the article is to find the effect of public expenditure (GI) and private project expenditure (PI) in different states on state gross domestic product (SGDP) and national gross domestic product (NDGP). The study also attempts to examine the sectors that contribute the most in growth of state and nation. The selected sectors in the study include manufacturing, mining, services, power, construction and infrastructure and irrigation. Data of all states and four union territories (UTs) for GI and PI in selected sectors are collected and a panel is formed. Four different regression equations are developed. The estimation is done using two-step Arellano–Bover/Blundell–Bond’s dynamic panel data to account for endogeneity and heteroscedasticity. The results suggest there exist two clusters of states in India. First cluster is of 13 states, which contributes towards the economic growth of nation and the other cluster is 16 states and UTs that do not contribute towards the economic growth of nation. The states that contribute towards the economic growth of nation do it primarily through private investment in the service sector.

scholarly journals Economic Growth, Public and Private Investment: A Comparative Study of China and the United States

2020 ◽  
Vol 12 (6) ◽  
pp. 2243
Author(s):  
Ibrahim Ari ◽  
Muammer Koc
Keyword(s):  
Economic Growth ◽  
Gross Domestic Product ◽  
Private Investment ◽  
The United States ◽  
Domestic Product ◽  
Public And Private ◽  
Macroeconomic Factors ◽  
Causal Relations ◽  
Sustainable Economic Growth ◽  
The U.S

Public and private investments play a central role in production functions by providing the required capital for development. There are many studies in the literature investigating the linear macroeconomic relations based on public and private investment in cross-country and country-specific analyses by focusing on various perspectives and methodologies. However, there is a gap in the literature in exploring nonlinear causal relations among public-private investment and economic growth, particularly in the U.S. and China, in order to comparatively discuss policy implementations and potential implications. To narrow the gap, this study investigates nonlinear causal relationships between public-private investment and gross domestic product in the U.S. and China, which are the largest economies comprising about 40 percent of the global gross domestic product (GDP) in 2018. These countries show a similar pattern in economic growth and implementing sustainable development goals, although they follow considerably different socio-economic regimes and fall into different development levels (i.e., developed and developing countries). Therefore, there should be a common underlying mechanism in macroeconomic factors that fosters economic development. In this regard, the motivation behind the study is to reveal a common, but hidden, behavior of the nonlinear causal relations of given macroeconomic factors in these countries to make recommendations about sustainable economic growth for policymakers. To this end, there are three main contributions of the paper. First, the research finds nonlinear dependencies in the related time series between 1960–2015, thereby nonlinear causality tests are performed to reach more reliable information than the linear causality. Second, the study formulates a feedback loop between public and private investment through economic growth, which indicates that public and private investment should stimulate each other directly or indirectly (i.e., through the GDP). Third, the direction of the causality does not affect sustainable economic growth as long as it exists directly or indirectly.

scholarly journals The Effects of Budget Deficit on Economic Growth and Development: The Experience of Ghana (1994 – 2014)

2017 ◽  
Vol 13 (4) ◽  
pp. 211 ◽  
Author(s):  
Napoleon Kurantin
Keyword(s):  
Economic Growth ◽  
Gross Domestic Product ◽  
Growth And Development ◽  
Budget Deficit ◽  
Private Investment ◽  
Sustainable Growth ◽  
Policy Implications ◽  
Domestic Product ◽  
Empirical Literature ◽  
Economic Growth And Development

This paper surveyed and access the empirical literature on the sources of budget deficit and their policy implications on the processes of sustainable economic growth and development. The Ghanaian experience and evidence shows that the budget is not projected to be on a sustainable growth path under current socio-economic and political (governance) policies; the budget is projected to increase more quickly than the country’s Gross Domestic Product (GDP). The modeling of underlying variables (Inflation, Gross Domestic Product, Real Interest Rate, Gross Investment, Real Exchange Rate) to estimate the quantitative effect of continued budget deficit on the rate of economic growth, governance and development. The sample used for this study is based on panel data-sets between 1994 and 2014. Results obtained from the analysis pointed to an adverse impact of continued budget deficit on the processes of economic growth and development. The paper recommends the adoption and implementation of policies that could reverse the un-sustained budget deficit leading to crowding out of the private investment but rather, put the economic on a sustained path of growth and, development in the medium to long term.

scholarly journals The Service Sector-Led Growth Relationship: The Case of Nigeria

2021 ◽  
pp. 90-111
Author(s):  
Ubong Edem Effiong ◽  
Joel Isaac Okon
Keyword(s):  
Economic Growth ◽  
Gross Domestic Product ◽  
Error Correction ◽  
Service Sector ◽  
Domestic Product ◽  
Long Run ◽  
Error Correction Mechanism ◽  
Short Run ◽  
Bounds Test ◽  
The Impact

This paper examined the impact of the service sector on economic growth of Nigeria. The study covers the period 1981 to 2019 and data were obtained from the Central Bank of Nigeria statistical bulletin. The Augmented Dickey-Fuller unit root, Granger Causality test, Vector Autoregressive (VAR) approach, Bounds test for cointegration, and vector error correction mechanism were utilized in analysing the data. Findings of the study revealed that a bidirectional causality exist between service sector and economic growth of Nigeria. Meanwhile, the VAR result presented an evidence of weak exogeneity of the service sector in predicting economic growth. However, both broad money supply and total government expenditure exerted a significant impact on economic growth. From the impulse response function, it was discovered that economic growth responded negatively to shocks in service sector output both in the short run and in the long run; while the variance decomposition indicated that gross domestic product (a proxy for economic growth) is strongly endogenous in predicting itself in the short run while such diminishes in the long run. The Bounds test for cointegration revealed evidence of long run equilibrium relationship and the error correction mechanism revealed that 88.30% of the short run disequilibrium in the gross domestic product are corrected annually. Meanwhile, it was discovered that professional, scientific and technical services is the major contributor to economic growth as captured by its short run and long run elasticity coefficients of 0.5936 and 0.9455 respectively. The paper recommended the need for stimulating industrialization as this is the major pathway through which the service sector can positively impact economic growth.

scholarly journals Effect of Aging on Health Expenditure and Gross Domestic Product in Selected Countries by A Dynamic Panel Approach

2019 ◽  
Author(s):  
Jafar Yahyavi Dizaj ◽  
Faroogh Na'emani ◽  
Yousef Mohammadzadeh ◽  
Kamran Irandoust
Keyword(s):  
Gross Domestic Product ◽  
Method Of Moments ◽  
Health Expenditure ◽  
Negative Impact ◽  
Generalized Method Of Moments ◽  
The Elderly ◽  
Dynamic Panel Data ◽  
Economic Effects ◽  
Domestic Product ◽  
Dynamic Panel

Background: An increase in the aging population can affect economic growth and Gross Domestic Product (GDP) by reducing labor supply, reducing productivity, and increasing burden on the population. The current study aimed to explain the economic effects of aging and examined the relationship between aging, health expenditure, and GDP.   Methods: This descriptive-analytical study was conducted using the data of global development indicators, published by World Bank for the selected countries from 1996 to 2017. The study population included 40 selected countries with moderate to high income. The data related to each country were extracted. Later, the dynamic panel data approach and generalized method of moments (GMM) were applied to analyze the information. Furthermore, the generalized method of moments regression was also used by Stata 14. Results: The findings showed that aging had a negative and significant effect on GDP, so that increase of 1.00 % in the elderly population decreased the GDP growth by 2.14 %. Furthermore, countries' investment in the health sector had a positive and significant effect on the GDP. In this regard, an increase of 1.00 % in health and treatment costs improved the GPD by 0.03 %. Multiplication of  aging in health expenditure and inflation index had a significant negative impact on the growth of GDP per capita. Conclusion: The results of this study showed that population aging reduced GDP by absorbing a part of the health expenditure. Therefore, in order to reduce the negative effects of this phenomenon, a long-term approach to budgeting is required to strengthen and support the pension fund, plan more comprehensive health insurance coverage for the elderly, and develop related institutions.

Polity Stability, Economic Growth, and Investment: A Dynamic Panel Analysis

2018 ◽  
Vol 25 (1) ◽  
Author(s):  
Halit Yanıkkaya ◽  
Taner Turan
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Private Investment ◽  
Developed Countries ◽  
Panel Estimation ◽  
Dynamic Panel ◽  
Public And Private ◽  
Dynamic Panel Analysis ◽  
Initial Results ◽  
Developing And Developed Countries

Abstract In this paper, we empirically examine the effect of polity stability on economic growth and investment by using the dynamic panel estimation techniques for more than 100 countries over the period 1960–2009. Our initial results imply that democracy reduces growth in both developed and developing countries. However, there is no evidence for the existence of a significant effect of the democracy level on the overall, public and private investment. Our results also suggest that the growth and investment effects of polity stability proxied by regime durability and polity fragility measures greatly differ in developing and developed countries. Our empirical results indicate that polity stability promotes growth only in developing countries. It seems that regime durability and polity fragility affect economic growth mainly through investment. We also make a distinction between public and private investment when examining the effects of polity stability. It seems that the durability and fragility matter for private investment. Therefore, developing countries ought to put solid efforts to lessen polity instability to promote economic growth.

Trends of Private Consumption in the Restructuring of China’s Economy

2015 ◽  
Vol 07 (04) ◽  
pp. 52-64
Author(s):  
Chien-Hsun CHEN
Keyword(s):  
Economic Growth ◽  
Gross Domestic Product ◽  
Private Consumption ◽  
Decisive Role ◽  
Domestic Product ◽  
Domestic Consumption ◽  
Labour Income ◽  
Rapid Economic Growth ◽  
Labour Share ◽  
China’S Economy

The benefits deriving from rapid economic growth have chiefly accrued to capital returns. Consequently, the decline in the share of Chinese gross domestic product (GDP) accounted for by labour income has been most pronounced. To sustain growth, China will have to ensure robust consumption. Increasing the labour share in GDP and hence promoting domestic consumption will play a decisive role in rebalancing China’s economy.

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