Reproducibility package for Revisiting Public Capital Needs: An Analysis Of Growth-Maximizing Investment With Efficiency And Congestion Effects
Reference ID
RR_WLD_2025_435
Author(s)
Santiago Herrera Aguilera, Hironobu Isaka, Christophe Hurlin
Collections
Metadata
Created on
Nov 07, 2025
Last modified
Nov 13, 2025
Overview
Abstract
This paper estimates growth-maximizing levels of public capital and investment across countries using a structural framework that accounts for three critical features: public investment efficiency, human capital levels, and congestion effects. We assemble a harmonized panel dataset covering 166 countries over 1960-2024 to estimate public capital output elasticities for the entire sample and for countries clustered by income group. These estimates are used to calibrate an endogenous growth model yielding closed-form expressions for the optimal public-investment-to-output ratio. We find a public capital output elasticity of around .20, which implies that countries invest slightly below their growth-maximizing levels. For the full sample and a homogenous elasticity of public capital, the observed investment-to-output ratio averages 4.6 percent, significantly below the growth-maximizing level of 5.4 percent. The shortfall in aggregate investment becomes even more significant when we use higher output elasticities of public capital. The aggregate results show considerable heterogeneity: public investment in advanced and emerging economies is, on average, 1.5-1.8 percent of GDP below the growth- maximizing levels, while in low-income countries the gap is far wider at 3.2 percent of GDP. Improving public expenditure efficiency can enable countries to increase investment without compromising fiscal sustainability. We also find that countries with large resource revenues, greater revenue and expenditure volatility, weaker fiscal governance, and lower institutional quality are more likely to have excessive levels of public investment. These results provide benchmarks for assessing public investment gaps and underscore the importance of expenditure efficiency, high-quality fiscal governance, and robust public institutions in achieving optimal levels of public investment.
Reproducibility Package
Scripts
File name
RR_WLD_2025_435
Zip package
RR_WLD_2025_435.zip
Title
Reproducibility package for Revisiting Public Capital Needs: An Analysis Of Growth-Maximizing Investment With Efficiency And Congestion Effects
Date
2025-11
Dependencies
R dependencies are listed in the file renv.lock. Stata dependencies are listed in the ado folder. Python dependencies are listed in requirenments.txt.
Instructions
See README in reproducibility package.
Notes
Computational reproducibility verified by Development Impact (DECDI) Analytics team, World Bank.
Source code repository
| Repository name | URI |
|---|---|
| Reproducible Research Repository (World Bank) | https://reproducibility.worldbank.org |
Reproducibility
Technology environment
Paper exhibits were reproduced on a computer with the following specifications:
• OS: Windows 11 Enterprise
• Processor: INTEL(R) XEON(R) PLATINUM 8562Y+ 2.80 GHz (4 processors)
• Memory available: 32 GB
Technology requirements
Run time: ~ 2 hours
Reproduction instructions
- Secure Access to Data: Access the datasets not included in the package. See subsection Datasets and the README for more details.
- Download and Place Data: Once the data is downloaded, users should place it in the appropriate folder.
- Run the Package: After placing the data in the folder:
- Open the R project "Replication Package" and run the files in "main_1" and "main_2".
- Recreate the environment using the requirements.txt file and run the notebook "01. Postest_Ig_cross"
- Run the do-file "02. Excess_Inv" after updating the global in line 2.
Since all the data is not included, the package includes the results produced by replicators in the Results folder. These files can be used to review the results presented in the paper.
Data
Datasets
Name
Human Development Index (HDI) Data
Note
Composite index published by UNDP capturing key dimensions of human development—health, education, and standard of living.
Files: 01. Data Collection/Human_Capital.xlsx
Access policy
Publicly available and included in the package.
License URL
https://hdr.undp.org/terms-use
Data URL
https://hdr.undp.org/data-center
Citation
United Nations Development Programme, Human Development Report Office (UNDP-HDRO). Human Development Index (HDI) Dataset. Latest update: 2023–24 Human Development Report. Data coverage: 1990–2023.
Name
IMF Investment and Capital Stock Dataset 2021
Note
Files: 01. Data Collection/IMFInvestmentandCapitalStockDataset2021.xlsx
Access policy
Publicly available and included in the package.
License URL
https://www.imf.org/en/About/copyright-and-terms#terms
Data URL
https://infrastructuregovern.imf.org/content/PIMA/Home/Knowledge-Hub/Publications.html
Citation
International Monetary Fund (IMF). (2021). IMF Investment and Capital Stock Dataset, 2021. Based on the methodology described in the 2021 Update of the Manual: “Estimating Public, Private, and PPP Capital Stocks” (IMF PIMA Knowledge Hub). The series and construction methods follow the perpetual inventory approach and draw on Gupta et al. (2014), Efficiency-Adjusted Public Capital and Growth, and Kamps (2006), New Estimates of Government Net Capital Stocks for 22 OECD Countries, 1960–2001.
Name
The World Economic Outlook (WEO) database
Note
The package uses two extracts from the IMF World Economic Outlook (WEO): (i) the WEO October 2024 edition (https://www.imf.org/en/Publications/WEO/weo-database/2024/October), and (ii) an extract from the WEO October 2023 edition specifically used for the GDP per capita series (https://www.imf.org/en/Publications/WEO/Issues/2023/10/10/world-economic-outlook-october 2023).
Files: 01. Data Collection /WEOOct2024all.xlsx; 03. Post-estimation/WEO_Data.xlsx
Access policy
Publicly available and included in the package.
License URL
https://www.imf.org/en/About/copyright-and-terms#terms
Citation
International Monetary Fund (IMF). (2024). World Economic Outlook: Policy Pivot, Rising Threats [Data set]. Washington, DC: IMF. October 2024.
International Monetary Fund (IMF). (2023). World Economic Outlook (WEO), October 2023 – GDP per capita extract [Data set].
Name
Infrastructure Efficiency Index (IEI)
Note
Files: 01. Data Collection /Infrastructure-Efficiency-Index-IEI-forsharing.xlsx
Access policy
Publicly available and included in the package.
Data URL
https://thedocs.worldbank.org/en/doc/a2071d190cf4c3cf96636aed353a61c0-0050062021/original/Infrastructure-Efficiency-Index-IEI-forsharing.xlsx
Citation
Devadas,Sharmila; Pennings,Steven Michael.2018. Assessing the Effect of Public Capital on Growth : An Extension of the World Bank Long-Term Growth Model (English). Policy Research working paper;no. WPS 8604 Washington, D.C. : World Bank Group.
Name
OECD Economic Outlook Database
Note
OECD Economic Outlook data (retrieved on April 30, 2024) were used for the following measures: gross domestic product, nominal value at market prices; gross domestic product in USD at constant exchange rates; general government fixed capital formation, nominal value (appropriation account); government gross fixed capital formation, volume; gross capital formation, total, volume; and the gross total fixed capital formation deflator.
Files: 01. Data Collection/OECD_ECO_GDP.xlsx, OECD_ECO_GDP_PPP.xlsx, OECD_ECO_IGAA.xlsx, OECD_ECO_IGV.xlsx, OECD_ECO_ITV.xlsx, and OECD_ECO_PIT.xlsx.
Access policy
Publicly available and included in the package.
License URL
https://www.oecd.org/en/about/terms-conditions.html
Data URL
https://data-explorer.oecd.org/vis?tm=cpi&pg=0&snb=22&df[ds]=dsDisseminateFinalDMZ&df[id]=DSD_EO_114%40DF_EO_114&df[ag]=OECD.ECO.MAD&df[vs]=1.0&dq=.GDPV_ANNPCT.&lom=LASTNPERIODS&lo=5&to[TIME_PERIOD]=false
Citation
OECD (2024), OECD Economic Outlook No. 114, OECD Economic Outlook database, (accessed on 30 April 2024).
Name
World Bank Fiscal Dataset
Note
Data is a collection of several fiscal policy datasets, primarily from internal surveys of country economists, covering government revenues, expenditures, and budget structures. Retrieved on February 2025.
Files: 01. Data Collection /World Bank Fiscal Datasets.xlsx
Access policy
Data is not included in the package. Access is limited to World Bank staff, and instructions for accessing the data are provided in the README.
Data URL
https://worldbankgroup.sharepoint.com/sites/MFMfpsg/SitePages/_World-Bank-Fiscal-Datasets.aspx
Citation
World Bank. (2025). World Bank Fiscal Datasets. Retrieved February 2025.
Name
Penn World Table version 10.01
Note
Files: 01. Data Collection/pwt1001.xlsx
Access policy
Publicly available and included in the package.
License
Creative Commons Attribution 4.0 International License
Data URL
https://www.rug.nl/ggdc/productivity/pwt/pwt-releases/pwt1001
Citation
Feenstra, Robert C., Robert Inklaar and Marcel P. Timmer (2015), "The Next Generation of the Penn World Table" American Economic Review, 105(10), 3150-3182, available for download at www.ggdc.net/pwt
Name
Macro Poverty Outlook Data
Note
World Bank dataset containing medium-term macroeconomic and poverty projections for low- and middle-income countries.
Files: 01. Data Collection/series_2_28_2024.csv
Access policy
Data is not included in the package. Access is limited to World Bank staff, and instructions for accessing the data are provided in the README.
Data URL
https://mtimodelling.worldbank.org/livempodata/mpodata.html
Citation
World Bank. (2024). Macro Poverty Outlook Data. Retrieved February 2024.
Name
Cross-Country Database of Potential Growth
Note
Dataset constructed by World Bank staff providing potential growth estimates using different methodologies (HP filter, MVF, UCM) across countries. Version: 23Q4 vintage.
Files: 01. Data Collection/Pot_HP_23Q4.csv; Pot_MVF_23Q4.csv; Pot_UCM_23Q4.csv
Access policy
Forthcoming on Development Data Hub.
Citation
Kilic Celik, S., M. A. Kose, F. Ohnsorge, and F. U. Ruch. 2023. "Potential Growth: A Global Database." Policy Research Working Paper 10354, World Bank, Washington, DC.
Name
Depreciation rate and Potential Growth per Worker
Note
Retrieves depreciation data from PWT and calculates potential growth per worker based on WDI, WEO, and the Database of Potential Growth.
Files: 01. Data Collection/Depreciation and Potential Growth per Worker.xlsx
Access policy
Forthcoming on Development Data Hub.
Citation
Herrera, S., Hurlin, C., & Isaka, H. (2025). Depreciation Rate and Potential Growth per Worker Dataset, based on PWT, WDI, WEO, and the Database of Potential Growth. Forthcoming on DDH.
Name
Quality of Government (QoG) Standard Data
Note
Quality of Government (QoG) Standard Time-Series dataset, containing ~400 variables from 80 sources covering institutions, governance, and policy.
Files: 03. Post-estimation/qog_std_ts_jan23_stata14.dta
Access policy
Public but cannot be redistributed.
License URL
https://www.gu.se/en/quality-government/qog-data/data-downloads/standard-dataset
Data URL
https://www.gu.se/en/quality-government/qog-data/data-downloads/data-archive#accordion=5690fc4e-c905-46c5-b67b-11a88f2af390
Citation
Teorell, Jan, Aksel Sundström, Sören Holmberg, Bo Rothstein, Natalia Alvarado Pachon, Cem Mert Dalli & Yente Meijers. 2023. The Quality of Government Standard Dataset, version Jan23. University of Gothenburg: The Quality of Government Institute, https://www.gu.se/en/quality-government doi:10.18157/qogstdjan23
Name
Resource Rich Country Database
Note
The package compiles a list of resource-rich countries using two sources: (i) the list of 32 natural resource-dependent countries from the World Bank study on fiscal procyclicality (Appendix E: https://documents1.worldbank.org/curated/en/510041565102137832/pdf/Why-Some-Countries-Can-Escape-the-Fiscal-Pro-Cyclicality-Trap-and-Others-Cannot.pdf), and (ii) the classification of resource-rich countries in the IMF’s 2012 policy paper (Appendix 1: https://www.imf.org/external/np/pp/eng/2012/082412.pdf).
Files: 03. Post-estimation/Resource_rich_countries.xlsx
Access policy
Publicly available and included in the package.
Citation
Kouame, Wilfred A.; Herrera, Santiago; Mandon, Pierre. 2019. Why Some Countries Can Escape the Fiscal Pro-Cyclicality Trap and Others Cannot ?. Policy Research working paper,no. WPS 8963;; Policy Research Working Paper;No. 8963. © World Bank. http://hdl.handle.net/10986/32215 License: CC BY 3.0 IGO.
Macroeconomic Policy Frameworks for Resource-Rich Developing Countries : Analytic Frameworks and Applications, International Monetary Fund, Washington, D.C, 2012.
Name
Public Expenditure and Financial Accountability (PEFA) Database
Note
Public Expenditure and Financial Accountability (PEFA) assessments, extended using author imputations to align 2011 and 2016 frameworks.
Files: 03. Post-estimation\Imputed_results_PEFA2016.xlsx
Access policy
Forthcoming on Development Data Hub.
Citation
Herrera, S., Hurlin, C., & Isaka, H. (2025). Extended Public Expenditure and Financial Accountability (PEFA) Assessments Dataset, harmonized across the 2011 and 2016 frameworks using author imputations [Data set]. Forthcoming on DDH.
Name
Quality of Expenditure Heatmaps
Note
Heatmap dataset summarizing public spending quality along three pillars (growth, stabilization, redistribution) and subcomponents, using multiple indicators. Version: 1.2
Access policy
Forthcoming on Development Data Hub.
Files: 03. Post-estimation\Quality of Expenditure Heatmaps.xlsx
Citation
Herrera Aguilera, S., & Isaka, H. (2023). Quality of Public Expenditure Heatmaps (Version 1.2) [Data set]. Last updated November 28, 2023. World Bank.
Name
Classification of Economies in the World Economic Outlook
Note
Author compiled using IMF classification of economies into Advanced, Emerging Market, and Developing categories.
Files: 03. Post-estimation/FP_Classification_Table.dta
Access policy
Publicly available and included in the package.
Data URL
https://www.imf.org/en/Publications/WEO/weo-database/2025/April/groups-and-aggregates
Citation
International Monetary Fund. 2025. World Economic Outlook: A Critical Juncture amid Policy Shifts. Washington, DC. April.
Name
Estimated Excess Investment
Note
Estimated Excess Investment across Advanced Economies, Emerging market Economies, Low Income Developing Countries.
Files: 03. Post-estimation/Excess_Inv.xlsx
Access policy
Forthcoming on Development Data Hub.
Citation
Herrera, S., Hurlin, C., & Isaka, H. (2025). Estimated Excess Investment across Advanced Economies, Emerging Market Economies, and Low-Income Developing Countries [Data set]. Forthcoming on DDH.
Data statement
Some data is not yet publicly available but is expected to be made available through the World Bank Development Data Hub in the future.
Description
Output
Type
Working Paper
Title
Revisiting Public Capital Needs: An Analysis Of Growth-Maximizing Investment With Efficiency And Congestion Effects
Description
Policy Research Working Papers (PRWP)
Authors
| Author | Affiliation | |
|---|---|---|
| Santiago Herrera Aguilera | World Bank | sherrera@worldbank.org |
| Hironobu Isaka | World Bank | hisaka@worldbank.org |
| Christophe Hurlin | University of Orléans | christophe.hurlin@univ-orleans.fr |
Date of production
2025-11-04
Scope and coverage
Geographic locations
| Location | Code |
|---|---|
| World | WLD |
Keywords
Public Capital
Infrastructure Investment
Long-Term Growth Model
Investment Efficiency
Topics
Disclaimer
Disclaimer
The materials in the reproducibility packages are distributed as they were prepared by the staff of the International Bank for Reconstruction and Development/The World Bank. The findings, interpretations, and conclusions expressed in this event do not necessarily reflect the views of the World Bank, the Executive Directors of the World Bank, or the governments they represent. The World Bank does not guarantee the accuracy of the materials included in the reproducibility package.
Access and rights
License
| Name | URI |
|---|---|
| Modified BSD3 | https://opensource.org/license/bsd-3-clause/ |
Contacts
Contacts
| Name | Affiliation | |
|---|---|---|
| Santiago Herrera Aguilera | World Bank | sherrera@worldbank.org |
| Reproducibility WBG | World Bank | reproducibility@worldbank.org |
Information on metadata
Producers
| Name | Abbreviation | Affiliation | Role |
|---|---|---|---|
| Reproducibility WBG | DECDI | World Bank - Development Impact Department | Verification and preparation of metadata |
Date of Production
2025-11-04
Document version
1