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Abstract
The main purpose of this paper is to estimate the impact of public investment on economic growth in Macedonia during the 2003-2014 period. Using the method of simple linear regression and ordinary least squares method (OLS) we will make assessment of the impact of public investment on economic growth in the Republic of Macedonia. According to the results of empirical research we proposed that public investments have a high impact on average real growth of the economy of the Republic of Macedonia. As we have found the majority of authors in their studies that public investments have a significant effect on the economic development of a country, and our results are of the same evaluation. Where possible we concluded that increasing public investment to 1%, would affect GDP growth for 0:35%. Since t-test shows that t = 1.26, is greater than 0.05 we may conclude that this ratio has significance.
Keywords: public investment, economic growth, Republic of Macedonia, economy, development
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Introduction
In conditions of globalization, the economy of Macedonia functions as an open market economy. In all modem economies, the state has an undisputable role and sometimes it has a primary role in the economic activity. The basic duty of the state in relation to the economy of each country's progress is the establishment and functioning of the legal and institutional platform on which economic activity takes place. Investment is the central factor in determining the gross domestic product, which is the measure of total economic output of a country. The society should invest more in order to increase its capacity to produce more goods and services with low cost which means greater productivity and economic growth. Public investments are closely related with the state and its functions. They are an important tool with what can be dealt in the economic, politic and social life of a state. An important role in the provision of public investment is played also by donors.
Public investments represent that part of national income allocated to cover public expenditures, which are general and special. Public investments mean the designation of public inputs to produce public services. There are complementarity relations between public and private investments about fulfilling one's needs in public, collective...