{"type":"script","doc_desc":{"producers":[{"name":"Reproducibility WBG","abbr":"DECDI","affiliation":"World Bank - Development Impact Department","role":"Verification and preparation of metadata"}],"prod_date":"2025-11-04","version":"1"},"project_desc":{"authoring_entity":[{"name":"Santiago Herrera Aguilera","affiliation":"World Bank","email":"sherrera@worldbank.org"},{"name":"Hironobu Isaka","affiliation":"World Bank","email":"hisaka@worldbank.org"},{"name":"Christophe Hurlin","affiliation":"University of Orl\u00e9ans","email":"christophe.hurlin@univ-orleans.fr"}],"title_statement":{"title":"Reproducibility package for Revisiting Public Capital Needs: An Analysis Of Growth-Maximizing Investment With Efficiency And Congestion Effects","idno":"RR_WLD_2025_435"},"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.","software":[{"name":"R","version":"4.4.0"},{"name":"Stata","version":"18 MP"},{"name":"Python","version":"3.10.18"}],"scripts":[{"title":"Reproducibility package for Revisiting Public Capital Needs: An Analysis Of Growth-Maximizing Investment With Efficiency And Congestion Effects","date":"2025-11","notes":"Computational reproducibility verified by Development Impact (DECDI) Analytics team, World Bank.","instructions":"See README in reproducibility package.","file_name":"RR_WLD_2025_435","zip_package":"RR_WLD_2025_435.zip","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."}],"repository_uri":[{"name":"Reproducible Research Repository (World Bank)","uri":"https:\/\/reproducibility.worldbank.org"}],"production_date":"2025-11-04","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.","geographic_units":[{"name":"World","code":"WLD"}],"keywords":[{"name":"Public Capital"},{"name":"Infrastructure Investment"},{"name":"Long-Term Growth Model"},{"name":"Investment Efficiency"}],"topics":[{"id":"O40","uri":"https:\/\/www.aeaweb.org\/econlit\/jelCodes.php?view=jel","vocabulary":"Journal of Economic Literature (JEL)","name":"General","parent_id":"O4"},{"id":" O47","uri":"https:\/\/www.aeaweb.org\/econlit\/jelCodes.php?view=jel","vocabulary":"Journal of Economic Literature (JEL)","name":"Empirical Studies of Economic Growth \u2022 Aggregate Productivity \u2022 Cross-Country Output Convergence","parent_id":"O4"},{"id":" E22","uri":"https:\/\/www.aeaweb.org\/econlit\/jelCodes.php?view=jel","vocabulary":"Journal of Economic Literature (JEL)","name":"Investment \u2022 Capital \u2022 Intangible Capital \u2022 Capacity","parent_id":"E2"},{"id":" H54","uri":"https:\/\/www.aeaweb.org\/econlit\/jelCodes.php?view=jel","vocabulary":"Journal of Economic Literature (JEL)","name":"Infrastructures \u2022 Other Public Investment and Capital Stock","parent_id":"H5"}],"output":[{"type":"Working Paper","description":"Policy Research Working Papers (PRWP)","title":"Revisiting Public Capital Needs: An Analysis Of Growth-Maximizing Investment With Efficiency And Congestion Effects"}],"language":[{"name":"English","code":"EN"}],"technology_requirements":"Run time: ~ 2 hours","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.","license":[{"name":"Modified BSD3","uri":"https:\/\/opensource.org\/license\/bsd-3-clause\/"}],"contacts":[{"name":"Santiago Herrera Aguilera","affiliation":"World Bank","email":"sherrera@worldbank.org"},{"name":"Reproducibility WBG","affiliation":"World Bank","email":"reproducibility@worldbank.org"}],"technology_environment":"Paper exhibits were reproduced on a computer with the following specifications:\n\u2022 OS: Windows 11 Enterprise\n\u2022 Processor: INTEL(R) XEON(R) PLATINUM 8562Y+ 2.80 GHz (4 processors)\n\u2022 Memory available: 32 GB","reproduction_instructions":"1. **Secure Access to Data:** Access the datasets not included in the package. See subsection Datasets and the README for more details.\n2. **Download and Place Data:** Once the data is downloaded, users should place it in the appropriate folder.\n3. **Run the Package:** After placing the data in the folder:\n      - Open the R project \"Replication Package\" and run the files in \"main_1\" and \"main_2\".\n      - Recreate the environment using the requirements.txt file and run the notebook \"01. Postest_Ig_cross\"\n      - Run the do-file \"02. Excess_Inv\" after updating the global in line 2.\n\nSince 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.","datasets":[{"name":"Human Development Index (HDI) Data","license_uri":"https:\/\/hdr.undp.org\/terms-use","access_type":"Publicly available and included in the package. ","note":"Composite index published by UNDP capturing key dimensions of human development\u2014health, education, and standard of living. \nFiles: 01. Data Collection\/Human_Capital.xlsx\n","citation":"United Nations Development Programme, Human Development Report Office (UNDP-HDRO). Human Development Index (HDI) Dataset. Latest update: 2023\u201324 Human Development Report. Data coverage: 1990\u20132023.","uri":"https:\/\/hdr.undp.org\/data-center"},{"name":"IMF Investment and Capital Stock Dataset 2021","uri":"https:\/\/infrastructuregovern.imf.org\/content\/PIMA\/Home\/Knowledge-Hub\/Publications.html","access_type":"Publicly available and included in the package. ","license_uri":"https:\/\/www.imf.org\/en\/About\/copyright-and-terms#terms","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: \u201cEstimating Public, Private, and PPP Capital Stocks\u201d (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\u20132001.","note":"Files: 01. Data Collection\/IMFInvestmentandCapitalStockDataset2021.xlsx\n"},{"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).\nFiles: 01. Data Collection \/WEOOct2024all.xlsx; 03. Post-estimation\/WEO_Data.xlsx","license_uri":"https:\/\/www.imf.org\/en\/About\/copyright-and-terms#terms","access_type":"Publicly available and included in the package. ","citation":"International Monetary Fund (IMF). (2024). World Economic Outlook: Policy Pivot, Rising Threats [Data set]. Washington, DC: IMF. October 2024.\nInternational Monetary Fund (IMF). (2023). World Economic Outlook (WEO), October 2023 \u2013 GDP per capita extract [Data set]."},{"name":"Infrastructure Efficiency Index (IEI) ","citation":"Devadas,Sharmila;\u00a0Pennings,Steven Michael.2018. Assessing the Effect of Public Capital on Growth : An Extension of the World Bank Long-Term Growth Model (English).\u00a0Policy Research working paper;no. WPS 8604 Washington, D.C. : World Bank Group. \n","note":"Files: 01. Data Collection \/Infrastructure-Efficiency-Index-IEI-forsharing.xlsx","uri":"https:\/\/thedocs.worldbank.org\/en\/doc\/a2071d190cf4c3cf96636aed353a61c0-0050062021\/original\/Infrastructure-Efficiency-Index-IEI-forsharing.xlsx","access_type":"Publicly available and included in the package. "},{"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. \nFiles: 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.","license_uri":"https:\/\/www.oecd.org\/en\/about\/terms-conditions.html","uri":"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":"OECD Economic Outlook Database","access_type":"Publicly available and included in the package. "},{"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.\nFiles: 01. Data Collection \/World Bank Fiscal Datasets.xlsx","access_type":"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.","uri":"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","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","uri":"https:\/\/www.rug.nl\/ggdc\/productivity\/pwt\/pwt-releases\/pwt1001","license":" Creative Commons Attribution 4.0 International License ","access_type":"Publicly available and included in the package. ","note":"Files: 01. Data Collection\/pwt1001.xlsx\n"},{"access_type":"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.","name":"Macro Poverty Outlook Data","note":"World Bank dataset containing medium-term macroeconomic and poverty projections for low- and middle-income countries.\nFiles: 01. Data Collection\/series_2_28_2024.csv\n","uri":"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.\nFiles: 01. Data Collection\/Pot_HP_23Q4.csv; Pot_MVF_23Q4.csv; Pot_UCM_23Q4.csv\n","access_type":"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.\nFiles: 01. Data Collection\/Depreciation and Potential Growth per Worker.xlsx\n","access_type":"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."},{"uri":"https:\/\/www.gu.se\/en\/quality-government\/qog-data\/data-downloads\/data-archive#accordion=5690fc4e-c905-46c5-b67b-11a88f2af390","citation":"Teorell, Jan, Aksel Sundstr\u00f6m, S\u00f6ren 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\n","license_uri":"https:\/\/www.gu.se\/en\/quality-government\/qog-data\/data-downloads\/standard-dataset","access_type":"Public but cannot be redistributed.","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.\nFiles: 03. Post-estimation\/qog_std_ts_jan23_stata14.dta\n"},{"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. \u00a9 World Bank. http:\/\/hdl.handle.net\/10986\/32215 License: CC BY 3.0 IGO.\nMacroeconomic Policy Frameworks for Resource-Rich Developing Countries\u202f: Analytic Frameworks and Applications, International Monetary Fund, Washington, D.C, 2012.","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\u2019s 2012 policy paper (Appendix 1: https:\/\/www.imf.org\/external\/np\/pp\/eng\/2012\/082412.pdf).\nFiles: 03. Post-estimation\/Resource_rich_countries.xlsx","access_type":"Publicly available and included in the package. "},{"note":"Public Expenditure and Financial Accountability (PEFA) assessments, extended using author imputations to align 2011 and 2016 frameworks.\nFiles: 03. Post-estimation\\Imputed_results_PEFA2016.xlsx","name":"Public Expenditure and Financial Accountability (PEFA) Database","access_type":"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_type":"Forthcoming on Development Data Hub. \nFiles: 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","uri":"https:\/\/www.imf.org\/en\/Publications\/WEO\/weo-database\/2025\/April\/groups-and-aggregates","note":"Author compiled using IMF classification of economies into Advanced, Emerging Market, and Developing categories.\nFiles: 03. Post-estimation\/FP_Classification_Table.dta\n","access_type":"Publicly available and included in the package. ","citation":"International Monetary Fund. 2025. World Economic Outlook: A Critical Juncture amid Policy Shifts. Washington, DC. April."},{"name":"Estimated Excess Investment","access_type":"Forthcoming on Development Data Hub.","note":"Estimated Excess Investment across Advanced Economies, Emerging market Economies, Low Income Developing Countries. \nFiles: 03. Post-estimation\/Excess_Inv.xlsx","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."}]},"tags":[{"tag":"DOI"},{"tag":"Forthcoming Data"},{"tag":"Open Code"}],"schematype":"script"}