Public Expenditures, Private Investment and Economic Growth in Togo - Theoretical Economics Letters

TEL > Vol.7 No.2, February 2017

Theoretical Economics Letters

Volume 7, Issue 2 (February 2017)

ISSN Print: 2162-2078 ISSN Online: 2162-2086

Google-based Impact Factor: 1.34 Citations

Public Expenditures, Private Investment and Economic Growth in Togo ()

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DOI: 10.4236/tel.2017.72017 2,029 Downloads 5,636 Views Citations

Author(s)

Koffi Yovo

Affiliation(s)

University of Lome, Lome, Togo.

ABSTRACT

This paper assesses firstly the impact of the level and the composition of public expenditures on growth and secondly the link between public investment and private investment in Togo. For this purpose, a neoclassical growth model and a private investment model were estimated using Two-Stage Least Squares. The findings highlight that during the period 1980-2013, the composition of public expenditures, contrarily to the level, had significant effect on economic growth. In fact, the public consumption had a negative impact whereas public investment had a positive impact on growth. Moreover, the study finds out that increasing public expenditures involves crowding-out effect on private investment. In the light of the results, the paper invites the Togolese government to change the composition of public expenditures by giving priority to the investment with careful arbitrage between private and public expenditures.

KEYWORDS

Public Expenditures, Private Investment, Economic Growth

Share and Cite:

Yovo, K. (2017) Public Expenditures, Private Investment and Economic Growth in Togo. Theoretical Economics Letters, 7, 193-209. doi: 10.4236/tel.2017.72017.

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