The Econometric Approach of the Impact of Public Investment in the Road-Infrastructure in the Economic Growth of Kosovo

Abstract

Economic growth and public investments are considered the most challenging problems faced by most countries around the world, including Kosovo. Various assumptions have been made that better and higher-quality transport is essential for the country's economic development. This study aims to analyze the relationship and the impact of public investments in road infrastructure on Kosovo's economic growth taking into analysis also other macroeconomics aggregates such as Consumption, Investment, Exports, and Imports. Two important aspects have been addressed within the extensive literature review, namely theoretical analysis of different studies elaborating on elements regarding infrastructure in general, such as social and economic infrastructure, and road infrastructure in particular. To analyze the impact of public investments in road infrastructure and other macroeconomics aggregates over Kosovo's economic growth, the econometric multiple regression model Ordinary Least Squares (OLS), the Pearson Correlation, and the Test for heteroskedasticity have been applied. The data used is secondary data obtain from the World Bank Indicators, Kosovo Agency of Statistics, and the Official Gazette of the Republic of Kosovo. All these models are tested with the STATA software program. Based on regression analysis, we can conclude that public investments in road infrastructure for Kosovo's economic growth are non-significant as their effect is manifested in the long run, but all the other independent variables from the OLS model are significant and impact the GDP growth of Kosovo. The study comes with some other conclusions, suggestions and opens paths for future researchers.