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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.
. Note : t statistics in parentheses. *** significant at 1%; ** significant at 5%; * significant at 10%. The results show that current government expenditure does not have a significant effect on economic growth, while government investments demonstrate
intervention for which the econometric analysis is the most suited method. The common approach of these articles is using a large, preferably international database of companies and building a model to test the effect of governmental investments choosing a
Abstract
The term “European Paradox” describes the perceived failure of the EU to capture full benefits of its leadership of science as measured by publications and some other indicators. This paper investigates what might be called the “American Paradox,” the decline in scientific publication share of the U.S. despite world-leading investments in research and development (R&D) — particularly as that decline has accelerated in recent years. A multiple linear regression analysis was made of which inputs to the scientific enterprise are most strongly correlated with the number of scientific papers produced. Research investment was found to be much more significant than labor input, government investment in R&D was much more significant than that by industry, and government non-defense investment was somewhat more significant than its defense investment. Since the EU actually leads the U.S. in this key component, this could account for gradual loss of U.S. paper share and EU assumption of leadership of scientific publication in the mid-1990s. More recently the loss of U.S. share has accelerated, and three approaches analyzed this phenomenon: (1) A companion paper shows that the SCI database has not significantly changed to be less favorable to the U.S.; thus the decline is real and is not an artifact of the measurement methods. (2) Budgets of individual U.S. research agencies were correlated with overall paper production and with papers in their disciplines. Funding for the U.S. government civilian, non-healthcare sector was flat in the last ten years, resulting in declining share of papers. Funding for its healthcare sector sharply increased, but there were few additional U.S. healthcare papers. While this inefficiency contributes to loss of U.S. share, it is merely a specific example of the general syndrome that increased American investments have not produced increased publication output. (3) In fact the decline in publication share appears to be due to rapidly increasing R&D investments by China, Taiwan, S. Korea, and Singapore. A model shows that in recent years it is a country’s share of world investment that is most predictive of its publication share. While the U.S. has increased its huge R&D investment, its investment share still declined because of even more rapidly increasing investments by these Asian countries. This has likely led to their sharply increased share of scientific publication, which must result in declines of shars of others — the U.S. and more recently, the EU.
score matching). The PVC and syndication increased innovation performance; government investments alone did not. Government funding had a positive effect if it supplemented the lead PVC investor
economy. Government investment accounts for a large share of agricultural R&D in Korea—over 70%—which is much higher than the percentage in other industries within Korea (Ministry for Food, Agriculture, Forestry and Fisheries of
between public spending and economic growth, although they indicated a weak positive correlation between government investments and economic growth, or between education spending and education quality indicators such as functional literacy results. Such
government investment, Hungary stands out with 6.06% but, if we look at government investments as a share of total GFCF, Greece performs the highest ratio (23.9%), Hungary comes only third (22.3%) after Latvia (22.6%), and Croatia and Sweden perform shares
-Lima et al. ( 2008 ) government investments were critical to the development of scientific research in Brazil. Currently, scientific research in the country is intrinsically linked to post-graduate programs strictu sensu located in universities. As
that economic development does not affect research priorities. Rather, it may mean the relationship between the two is subtle for medicine, life sciences, and natural sciences needing longer production cycle, or that government investment in fundamental
