The role of equipment investments in economic growth: a cointegration analysis
by Marinko Škare; Dean Sinković
International Journal of Economic Policy in Emerging Economies (IJEPEE), Vol. 6, No. 1, 2013

Abstract: New growth theories emerged during 1990s underlined the importance of exploring a link between the disaggregated level of investment and economic growth. We investigate the link between the different forms of investments (equipment, structure and human capital) and real GDP growth in Republic of Croatia for the (pre)transition period 1960-1989 and transition period 1990-2011. Our results suggest that equipment investments have a special role in increasing the GDP growth rates that is consistent with the work of De Long and Summers and Temple. Equipment investments-growth link is stronger than the structure investment-growth. We infer that small-open economies and particularly former planned economies through intensive equipment investment policy can enhance and sustain long-term growth.

Online publication date: Sat, 28-Jun-2014

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