Public Education Expenditure and Other Determinants of Private Investment in the Caribbean

By Joaquim Vieira Ferreira Levy, Benedict J. Clements

October 1, 1994

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Joaquim Vieira Ferreira Levy, and Benedict J. Clements Public Education Expenditure and Other Determinants of Private Investment in the Caribbean, (USA: International Monetary Fund, 1994) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper presents an analysis of the determinants of private investment in the Caribbean region, using data for the 1977-91 time period. Drawing on the endogenous growth literature, a model is developed to capture the impact of public education expenditure on private sector capital formation. The implications of this model are tested in the context of an econometric model assessing the impact of education and other variables on the share of private investment in GDP. The empirical results reveal that public education outlays, as well as economic growth, have a significant effect on private capital formation. Public investment has a negative effect on private investment, while real interest rates and external debt burdens are found to have no statistically significant impact on private investment.

Subject: Capital formation, Education spending, Expenditure, Financial services, National accounts, Private investment, Public investment spending, Real interest rates

Keywords: Capital formation, Caribbean, Education spending, GDP, GDP ratio, Government infrastructure investment, Investment, Investment decision, Investment opportunity, Investment performance, Investment rate, Investment ratio, Private investment, Public investment spending, Real interest rates, WP

Publication Details

Pages:

28
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1994/122
Stock No:

WPIEA1221994
ISBN:

9781451854428
ISSN:

1018-5941

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