Capital Ownership And Its Impact On International Trade And Economic Growth: The Tunisian Experience

Abstract

Despite the widespread belief that a privatized economy performs better than a centrally planned one, there is no empirical evidence on whether changing the structure of capital ownership affects trade and growth in developing countries. This paper addresses this issue by analyzing and comparing the distinctive effects of privately and publicly owned capital on international trade and economic growth. Based on a modified version of the neo-classical one-sector aggregate production technology, we investigate the intertemporal interactions among the growth rate of real output, private capital, public capital, international trade and labor. The results of applying our methodology to data from Tunisia suggest that private capital performs better than public capital in promoting economic growth and international trade.  Despite the widespread belief that a privatized economy performs better than a centrally planned one, there is no empirical evidence on whether changing the structure of capital ownership affects trade and growth in developing countries. This paper addresses this issue by analyzing and comparing the distinctive effects of privately and publicly owned capital on international trade and economic growth. Based on a modified version of the neo-classical one-sector aggregate production technology, we investigate the intertemporal interactions among the growth rate of real output, private capital, public capital, international trade and labor. The results of applying our methodology to data from Tunisia suggest that private capital performs better than public capital in promoting economic growth and international trade.