Abstract:
This paper assesses firstly the impact of the level and the composition of
public expenditures on growth and secondly the link between public investment
and private investment in Togo. For this purpose, a neoclassical growth
model and a private investment model were estimated using Two-Stage Least
Squares. The findings highlight that during the period 1980-2013, the composition
of public expenditures, contrarily to the level, had significant effect on
economic growth. In fact, the public consumption had a negative impact
whereas public investment had a positive impact on growth. Moreover, the
study finds out that increasing public expenditures involves crowding-out effect
on private investment. In the light of the results, the paper invites the
Togolese government to change the composition of public expenditures by
giving priority to the investment with careful arbitrage between private and
public expenditures.
