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How High Is the Social Rate of Return to Investment

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  • Oulton, Nicholas
  • Young, Garry

Abstract

Does the social rate of return to physical investment exceed the private rate to an economically significant extent? In particular, is the return to investment in plant and machinery very high? We address this question by estimating a number of different models employing cross-section, time series and panel methods on data from the Penn World Table. The balance of the evidence suggests the answer to these two questions is no, particularly for the currently rich countries. The estimated elasticity of output with respect to capital seems roughly equal to capital's share and the estimated social rate of return is in line with estimates of the private rate. Copyright 1996 by Oxford University Press.

Suggested Citation

  • Oulton, Nicholas & Young, Garry, 1996. "How High Is the Social Rate of Return to Investment," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 12(2), pages 48-69, Summer.
    • Handle: RePEc:oup:oxford:v:12:y:1996:i:2:p:48-69
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    Citations

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    Cited by:

    1. Capolupo, Rosa, 2009. "The New Growth Theories and Their Empirics after Twenty Years," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-72.
    2. Pemberton, James, 1999. "Social Security: National Policies with International Implications," Economic Journal, Royal Economic Society, vol. 109(457), pages 492-508, July.
    3. Julia Korosteleva & Colin Lawson, 2010. "The Belarusian case of transition: whither financial repression?," Post-Communist Economies, Taylor & Francis Journals, vol. 22(1), pages 33-53.
    4. Rosa Capolupo, 2005. "THE NEW GROWTH THEORIES AND THEIR EMPIRICS, Discussion Paper in Economics, University of Glasgow, N. 2005-04 (http://www.gla.ac.uk/Acad/Economics," GE, Growth, Math methods 0506003, University Library of Munich, Germany.
    5. Edwin Goni & William F. Maloney, 2014. "Why don’t Poor Countries do R&D?," Documentos CEDE 11947, Universidad de los Andes, Facultad de Economía, CEDE.
    6. Rosa Capolupo, "undated". "The New Growth Theoris and their Empirics," Working Papers 2005_4, Business School - Economics, University of Glasgow.
    7. Jakob B. Madsen, 2005. "A Century Of Economic Growth: The Social Returns To Investment In Equipment And Structures," Manchester School, University of Manchester, vol. 73(1), pages 101-122, January.
    8. Hilary Steedman, 1996. "Measuring the Quality of Educational Outputs: A Note," CEP Discussion Papers dp0302, Centre for Economic Performance, LSE.
    9. Farhadi, Minoo, 2015. "Transport infrastructure and long-run economic growth in OECD countries," Transportation Research Part A: Policy and Practice, Elsevier, vol. 74(C), pages 73-90.
    10. Jakob Madsen, 1998. "Errors-in-variables, supply side effects, and price elasticities in foreign trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 134(4), pages 612-637, December.
    11. Crafts, Nicholas, 2003. "Quantifying the contribution of technological change to economic growth in different eras: a review of the evidence," Economic History Working Papers 22350, London School of Economics and Political Science, Department of Economic History.

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