Abstract

Public investment has shown increasing trends both in nominal and as a share of GDP over years in Ethiopia. These upsurges in public investment are believed to be due to factors that have visible impact on the fiscal posture of the country. To investigate the validity of Wagner’s law in Ethiopia; this study sets determinants of public investment in Ethiopia as a general objective. Specifically, the study sought to examine the main influencing factors on level of public investment in Ethiopia along three sets of explanatory variables. In order to meet the aforementioned objective, the study employed an autoregressive distributed lag (ARDL) approach over the period 1985–2019. Results from the bound tests show that there is a long-run relationship between the variables. The real per capita GDP is found to be positively and significantly impact on level of public investment which shows that there an evidence in favour of Wagner’s law,i.e. public spending has a high income elasticity of demand. This study also found that there is a positive relationship between public investment and private investment which shows that two are moving in tandem. Again, the study also found that foreign aid has positive impact on public investment implying that additional foreign aid leads to larger spending of the government on capital. Moreover, the study found that the degree of urbanization suggests that levels of public spending are higher in the urban sector than rural economies. These findings give strong policy implication to the policy makers because an increase in public investments in may then help spur economic growth.

摘要

多年来，埃塞俄比亚的公共投资无论是名义上还是占 GDP 的份额都呈上升趋势。人们认为，这些公共投资的激增是由于对国家财政状况有明显影响的因素造成的。调查瓦格纳定律在埃塞俄比亚的有效性；本研究将埃塞俄比亚公共投资的决定因素作为总体目标。具体而言，该研究试图通过三组解释变量来检验影响埃塞俄比亚公共投资水平的主要影响因素。为了实现上述目标，该研究在 1985-2019 年期间采用了自回归分布滞后 (ARDL) 方法。边界检验的结果表明变量之间存在长期关系。发现实际人均GDP对公共投资水平有显着的正向影响，这表明有证据支持瓦格纳定律，即公共支出具有较高的需求收入弹性。本研究还发现，公共投资和私人投资之间存在正相关关系，这表明两者是同步发展的。同样，该研究还发现，外援对公共投资有积极影响，这意味着额外的外援会导致政府在资本上的更大支出。此外，研究发现，城市化程度表明城市部门的公共支出水平高于农村经济体。这些发现为决策者提供了强有力的政策启示，因为公共投资的增加可能有助于刺激经济增长。