The Role of Public Investments in Regional Development: A Theoretical Review

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The aim of this study is to inquire into the theoretical background between public investments and economic development. To this purpose, we have conducted a detailed review of the literature on public capital and economic growth and tried to work out a road map of its progress from the birth of ‘development economics’ in the 1950’s to the present focus on ‘regional development’. According to the new regional development paradigm, investments for developing social infrastructure and human capital are at least as important as those for physical infrastructure. On the other hand, regardless of their agreement or disagreements, rather than focusing on the profitability of autonomous single firms in isolation, it is the significance of forward and backward linkages and cumulative effect of the interactions between firms, sectors of the economy as well as the dependency of economic growth on institutions that constitutes the common ground. Therefore one recurrent theme, albeit formulated and appearing in different concepts in the various approaches on the relationship between public investments and development, is the emphasis on the inducement potentials, externalities and interactions as a whole determining the fundamental ground and the paradigmatic frame of the debates on economic development.

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Public Investments , public capital , public investment criterias , cummulative causations , regional development

Ege Academic Review (EAR)

324

Ege Academic Review (EAR)