Public capital boosts productivity in OECD countries, driving economic growth.
The article explores how public investments affect productivity in OECD countries from 1975 to 2002. By analyzing data from 21 countries, the researchers found that public capital has a positive impact on GDP, with an elasticity between 0.05 and 0.15. They also discovered common factors driving the relationship among variables, indicating a strong connection between public capital and productivity. The results remained consistent even when considering spillovers from other countries and controlling for factors like human capital, patents, and R&D capital.