An investigation of the relationship between public infrastructure investments and fiscal sustainability in Namibia
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Date
2022
Authors
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Journal ISSN
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Publisher
University of Namibia
Abstract
The study investigates the relationship between public infrastructure investment and fiscal sustainability in Namibia. The study aimed to determine whether there is a link between public infrastructure investment and fiscal sustainability indicators, such as the budget deficit, public debt, and growth. The study uses indicators of fiscal sustainability to highlight the ability of the Namibian public sector to meet its financial obligations, as well as determine the direction of causality and establish if they have any long-run relationship with public infrastructure investment. The study employs a combination of three dynamic estimation models for robust estimates of co-integration regression derived from empirical evidence for 25 years from 1994 to 2019. There is evidence of a causal relationship between public infrastructure investment and fiscal sustainability indicators (Budget Balance, Public Debt, and Growth). In addition, the study found that public infrastructure investment (PII) had a significant unidirectional positive long-run relationship with GDP growth and budget balance, while total public debt had a bidirectional negative relationship with PII in the long run. The study revealed a short-run unidirectional positive relationship between public infrastructure and total public debt, as well as a negative short-run relationship with budget balance. The research confirmed the existence of causal linkages and established their magnitudes and directions. Thus, it advises that modelling thresholds be concentrated on assisting decision-making for development finance planning and resource mobilisation sustainably.
Description
A thesis submitted in partial fulfilment of the requirements for the Degree of Master of Science (Development Finance)
Keywords
Fiscal sustainability, Infrastructure development, ARDL Namibia