Article · August 021 doi: 10. 13106/jafeb. 2021. vo n 0345 citations 14 reads 5,190 authors

2.2. Previous Empirical Studies
Economists around the world have long debated the 
impact of investment on economic growth. However, it was 
not until the late 80s of the 20th century, with the rise of the 
economy, abundant data on the economy, political and social 
indicators of nations and territories, many empirical kinds 
of research on the impact of investment on new economic 
growth have been conducted systematically.
With the desire to obtain specific evidence on the 
foundation of collected secondary data, the quantitative 
research method was used by the author in this study. Some 
typical relevant related studies are as follows:
Researching 7 countries - in Group of Seven (advanced 
economic countries) - from 1967 to 1985 on the effects of 
investment towards the economic growth, Aschauer (1989a) 
studied through series of time series data with latency for 
both public investment and private investment variables. 
The results showed that public investment was a key factor 
that positively affects labor productivity of the economy as 
well as a private investment also had a positive impact on the 
growth. However, public spending had the opposite effect on 
growth. More importantly, the study also found that public 
investment had a stimulating effect on economic growth via 
providing infrastructure to make the economic activity of the 
private investment sector better.
Aschauer (1989b) considered the relationship between 
aggregate productivity and stock and flow government-
spending variables. The empirical results indicated that (i) 
the nonmilitary public capital stock is dramatically more 
important in determining productivity than is either the flow 
of nonmilitary or military spending, (ii) military capital bears 
little relation to productivity, and (iii) a ‘core’ infrastructure 
of streets, highways, airports, mass transit, sewers, water 
systems, etc. has most explanatory power for productivity. 
The paper also suggested an important role for the net public 
capital stock in the ‘productivity slowdown’ of the last 
fifteen years. 
In assessing the effectiveness of investment and public 
expenditure with economic growth rates in 98 countries 
between 1960 and 1985, Barro (1991) established a research 
model of control variables. The results indicated that there 
is no evidence to determine whether public investment had 
an impact on economic growth or not, but that government 
spending had a negative effect on economic growth.
In a study on the impact of public policy, private 
investment, and savings in the private sector on economic 
growth, including a sample of 41 sub-Saharan African 
countries from 1981 to 1992, Hadjimichael and Ghura (1995) 
assessed empirically the role of public policies in stimulating 
private savings and investment in sub-Saharan African 
countries, based on data for the period 1986–92. The main 
findings of the analysis were as follows: (i) policies effective 
in stimulating private savings and investment include those 
that keep the rate of inflation low, reduce macroeconomic 
uncertainty, promote financial deepening, and lower the 
external debt burden; (ii) measures that promote structural 
reforms and reduce the budget deficit (without lowering 
government investment) help to raise private investment; 
and (iii) declines in government savings are only partially 
offset by increases in private savings.
Devarajan et al. (1996) focused on the link between 
the level of public expenditure and growth and derived 
conditions under which a change in the composition of 
expenditure leads to a higher steady-state growth rate of 
the economy. The conditions depended not just on the 

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