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Public And Private Capital Formation And Economic Growth In Malaysia, 1961-1995

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  • Mansor H. Ibrahim

Abstract

This paper analyzes the productivity of public and private capital formation in a developing economy, Malaysia, using annual data from 1961 to 1995. The analysis is based on neoclassical growth regression, where the transition to the steady-state level of income per capita is modeled using an error correction framework. The results suggest that the public investment has been unproductive over the periods under consideration. Consistent with existing empirical studies, the private investment rate and the export performance of the country are positively related to economic growth. Our results call for a reduction in the public capital formation. However, for this recommendation to be more convincing, we believe that further analyses are much needed to examine which types of public capital are unproductive.

Suggested Citation

  • Mansor H. Ibrahim, 2000. "Public And Private Capital Formation And Economic Growth In Malaysia, 1961-1995," IIUM Journal of Economics and Management, IIUM Journal of Economis and Management, vol. 8(1), pages 21-40, June.
    • Handle: RePEc:ije:journl:v:8:y:2000:i:1:p:21-40
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    References listed on IDEAS

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    1. John A. Tatom, 1991. "Public capital and private sector performance," Review, Federal Reserve Bank of St. Louis, issue May, pages 3-15.
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    5. Raymond Batina, 1998. "On the Long Run Effects of Public Capital and Disaggregated Public Capital on Aggregate Output," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 5(3), pages 263-281, July.
    6. Sims, Christopher A & Stock, James H & Watson, Mark W, 1990. "Inference in Linear Time Series Models with Some Unit Roots," Econometrica, Econometric Society, vol. 58(1), pages 113-144, January.
    7. Khan, Mohsin S & Kumar, Manmohan S, 1997. "Public and Private Investment and the Growth Process in Developing Countries," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 59(1), pages 69-88, February.
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    Cited by:

    1. Ramez Abubakr Badeeb & Jeremy Clark & Abey P. Philip, 2021. "The Nonlinear Effects of Oil Rent Dependence on Malaysian Manufacturing: Implications from Structural Change using a Markov-Regime Switching Model," Working Papers in Economics 21/11, University of Canterbury, Department of Economics and Finance.
    2. Blessing Ropafadzo Chigunhah & Ezekia Svotwa & Gerald Munyoro & Tendai J. Mabvure & Ignatius Govere, 2020. "Private Capital Formation Activities and Bank Credit Access Among Farmers in Zimbabwe," International Journal of Economics and Financial Issues, Econjournals, vol. 10(3), pages 225-235.

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    More about this item

    Keywords

    Cointegration; Economic growth; Public capital;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E69 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Other
    • O49 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Other
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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