Public And Private Investment

INTRODUCTION

In recent decades, the world has witnessed the transformation and economic growth that South Korea has developed and how this country has served as a model for many developing countries. With its industrialization since 1960’s the relationship between infrastructure and economic growth has been part of several studies and researches, demonstrating that it has contributed to itseconomic development. This development has been enhanced through the investment both public and private sector have allocated to the infrastructure. Infrastructure has been one of the public goods that have presented a better performance in the shift from government provision to private supply. Projects such as roads, electricity, water and sanitation, irrigation, transport and communications havebeen perceived as duty of government to provide the service. One of the main policy objectives of the Korean government has been the provision of adequate infrastructure to guarantee the quality of life. However, over the first 20 years of the 21st century, the government will spend more than US$300 billion on airports, roads, railways, and mega-resorts (World Bank 2000). The development of thisinfrastructure is essential to enhance the competitiveness of economic activities and provide the services required by the general population. The absence of an adequate infrastructure and inefficient provision of infrastructure services are major obstacles to the effective implementation of development policies and securing of economic growth rates that exceed the international average. LatinAmerica is one of the regions with the greatest potential for economic growth worldwide. In the last five years the growth of the region stood at an average level of 4.0% real. Some economies in the region have experienced exceptional performance. For example, Peru, Colombia and Panama showed rates of real growth equivalent 7.8%, 4.4% and 7.5% respectively in recent years. The macroeconomic andpolitical stability now enjoyed by Latin America, are important factors that can help the region in order that the latter can consolidate its economic potential once. However, Latin American countries still have significant challenges that prevent exploit their potential. In particular, low levels of investment in infrastructure is an obstacle that must be overcome to enable the region to trigger itseconomic growth .

OBJECTIVES
This study aims to determine how South Korea developed its infrastructure, based on the public and private investment, to enhance the economic growth, and it will contribute to the field of study by summarizing the evidence on the economic effects of the performance of the Korean government in the allocation of infrastructure investments during the last decade,taking remarkable lessons to Latin American countries, and a special analysis will be done in the case of the textile industry in the countries of Guatemala and Colombia.
LITERATURE REVIEW
Some of the most prominent analyses in the economic literature of the last decade have shown the relationship between infrastructure investment and the economic growth. The government has been responsible forproviding the necessary infrastructure in the country and Canning and Pedroni (2008) determined that there is no evidence of a worldwide infrastructure shortage but due to the possibilities of external assistance, it has led to a misdistribution of resources, especially in allocation of budget; some countries are over-invested while others are under-invested in particular infrastructure type.
Severalstudies claim the existence of a link between infrastructure provision and economic growth in countries and regions, but the validity of such a claim has not been proven conclusively (Estache, Foster and Wodon, 2002). Since infrastructure contributes to the production, it refers to the need to expand and renovate public investments. Ortegon and Pacheco (2004) understand by investment any...