Public and Private Investment and the Convergence of Per Capita Incomes in Developing Countries
IMF Working Papers, June 1, 1993
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- Public and Private Investment and the Convergence of Per Capita Incomes in Developing Countries
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Bibliographic details
- Authors: Mohsin S. Khan, Manmohan S. Kumar
- Published: June 1, 1993
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451847031.001
Summary of paper
- Authors: Mohsin S. Khan, Manmohan S. Kumar
- Publication date: June 1, 1993
- Paper examines convergence in real per capita incomes across developing countries during the last two decades (as of the paper).
- Emphasis on separate roles of private and public sector investment in determining both the extent and the speed of convergence.
- Also investigates the importance of the stock of human capital, trade orientation, and foreign direct investment in the long-run growth process.
- Empirical tests carried out for a large sample of 95 developing countries over the period 1970-90.
- Main result: provides support for the notion of differential effects of public and private investment on long-term growth, as well as for the convergence hypothesis.
Empirical approach and data
- Sample size: 95 developing countries.
- Sample period: 1970-90.
- Analysis disaggregates investment into public sector investment and private sector investment.
- Controls and additional explanatory factors examined include: stock of human capital, trade orientation, and foreign direct investment.
Key findings and interpretations
- Evidence supports convergence in real per capita incomes across the sampled developing countries over 1970-90.
- Public and private investment have differential effects on long-term growth:
- The paper explicitly reports support for the "notion of differential effects of public and private investment on long-term growth."
- Human capital, trade orientation, and foreign direct investment are identified as important factors in the long-run growth process (the paper "considers the importance" of these factors and includes them in empirical tests).