Impact of Investments in Public Infrastructures on Economic Performance and Private Investment in Developing Countries: A Case Study for Tunisia

Abstract

This article aims to evaluate the impact of different categories of investments in public infrastructures on economic growth and private investment in Tunisia over the period 1975-2014. By using the generalized method of moments, we estimate a simultaneous equations model containing a growth equation and a private investment equation. In the empirical study, we have introduced both economic and social infrastructures. The results demonstrate that in the two cases, the investments in public infrastructures affect positively and strongly the growth and private investment. The experience from Tunisia suggests that it is necessary to adopt economic policies that develop the physical infrastructures and improve the quality of human capital for sustainable economic growth in developing countries.

Keywords

• Economic growth
• private investment
• economic infrastructures
• social infrastructures
• simultaneous equations model.