Sectoral Public Investment and Economic Growth in the Department of Lima, 2007–2025
DOI:
https://doi.org/10.33595/2226-1478.17.1534Keywords:
Public investment, economic growth, sectoral investmentAbstract
Although the Department of Lima concentrates the largest share of public investment in Peru, its economic growth exhibits persistent differences across sectors, raising questions about the effect of sectoral public investment. The objective of this study is to analyze the long-run relationship between public investment and economic growth and to sectorally decompose this aggregate effect for the Department of Lima during the period 2007–2025. A Fully Modified Ordinary Least Squares (FMOLS) model was applied, which is suitable for non-stationary series and corrects for endogeneity and serial correlation, incorporating control variables such as investment in other sectors, private investment, and the economically active population.The results show that, overall, public investment has a positive effect on economic growth, with a coefficient of β = 0.20. At the sectoral level, only public investment in the transport sector shows a positive and statistically significant coefficient, while the remaining sectors do not present statistically significant coefficients. This finding indicates that the sectoral composition of public investment conditions its impact on economic growth, highlighting the role of transport infrastructure as the main channel through which public investment influences the economic dynamics of the Department of Lima.
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