In this article the effects of government infrastructure investment in a small open economy environment are analysed. Apart from enhancing the country’s output directly, government spending on capital — modelled here as development of public infrastructure — creates positive externalities in the production process of the private sector. Short- and long-run effects of ambitious development programs, depending on the source of financing (transfers or loans from abroad), are addressed. The empirical relevance of the quantitative conclusions to be derived from the present stylised form of the model is admittedly limited. However, the qualitative conclusions can add some new insights and contribute to the lively debate on the expected effects of government investments and EU transfers on macroeconomic development.
External Debt and Capital Flight in Sub-Saharan Africa's Heavily Indebted Poor Countries .
Society and Economy
41 ( 4 ): 523 – 542 . 10.1556/204.2019.41.4.8
Bacha , E. L
. ( 1990 ): A Three-gap Model of ForeignTransfers and the
-historical and cultural-historical importance, this also encompasses the question of the confrontation between indigenous, traditional, “Germanic” laws and the foreign, transferred, scholarly legislation that was occasionally imposed on the community by force