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A theory of infrastructure-led development

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  • Agénor, Pierre-Richard

Abstract

This paper proposes a theory of long-run development based on public infrastructure as the engine of growth. The government, in addition to investing in infrastructure, spends on health services, which in turn raise labor productivity and lower the rate of time preference. Infrastructure affects the production of both commodities and health services. As a result of network effects, the degree of efficiency of infrastructure is nonlinearly related to the stock of public capital itself. Provided that governance is adequate enough to ensure a sufficient degree of efficiency of public investment, an increase in the share of spending on infrastructure (financed by a cut in unproductive expenditure or foreign grants) may facilitate the shift from a low growth equilibrium, characterized by low productivity and low savings, to a high growth steady state.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 34 (2010)
Issue (Month): 5 (May)
Pages: 932-950

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Handle: RePEc:eee:dyncon:v:34:y:2010:i:5:p:932-950

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Web page: http://www.elsevier.com/locate/jedc

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Keywords: Infrastructure Network effects Poverty traps;

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Citations

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Cited by:
  1. Daido, Kohei & Tabata, Ken, 2013. "Public infrastructure, production organization, and economic development," Journal of Macroeconomics, Elsevier, vol. 38(PB), pages 330-346.
  2. Taotao Deng & Shuai Shao & Lili Yang & Xueliang Zhang, 2014. "Has the transport-led economic growth effect reached a peak in China? A panel threshold regression approach," Transportation, Springer, vol. 41(3), pages 567-587, May.
  3. Santiago Acosta-Ormaechea & Atsuyoshi Morozumi, 2013. "Can a Government Enhance Long-run Growth by Changing the Composition of Public Expenditure?," Discussion Papers 2013/01, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
  4. Eleftherios Goulas & Athina Zervoyianni, 2013. "The Growth-Crime Relationship: Are There any Asymmetries?," Working Paper Series 54_13, The Rimini Centre for Economic Analysis.
  5. Emanuele Campiglio, 2013. "The structural shift to green services: A twosector growth model with public capital and open-access resources," Grantham Research Institute on Climate Change and the Environment Working Papers 141, Grantham Research Institute on Climate Change and the Environment.
  6. Agenor, Pierre-Richard & Dinh, Hinh T., 2013. "Social capital, product imitation and growth with learning externalities," Policy Research Working Paper Series 6607, The World Bank.
  7. Gillanders, Robert, 2013. "Corruption and Infrastructure at the Country and Regional Level," MPRA Paper 46679, University Library of Munich, Germany.
  8. Goulas, Eleftherios & Zervoyianni, Athina, 2013. "Growth, deficits and uncertainty: Theoretical aspects and empirical evidence from a panel of 27 countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(4), pages 380-392.
  9. Juliana Dutra Araujo & Grace Bin Li & Marcos Poplawski-Ribeiro & Luis-Felipe Zanna, 2013. "Current Account Norms in Natural Resource Rich and Capital Scarce Economies," IMF Working Papers 13/80, International Monetary Fund.
  10. Agénor, Pierre-Richard & Aizenman, Joshua, 2010. "Aid volatility and poverty traps," Journal of Development Economics, Elsevier, vol. 91(1), pages 1-7, January.
  11. Will Clark & Birgir Arnason, 2014. "Surging Investment and Declining Aid: Evaluating Debt Sustainability in Rwanda," IMF Working Papers 14/51, International Monetary Fund.
  12. Santiago Acosta Ormaechea & Atsuyoshi Morozumi, 2013. "Can a Government Enhance Long-Run Growth by Changing the Composition of Public Expenditure?," IMF Working Papers 13/162, International Monetary Fund.
  13. Eugenia Vella & Evangelos Dioikitopoulos & Sarantis Kalyvitis, . "Green Spending Reforms, Growth and Welfare with Endogenous Subjective Discounting," DEOS Working Papers 1335, Athens University of Economics and Business.
  14. Era Dabla-Norris & Jim Brumby & Annette Kyobe & Zac Mills & Chris Papageorgiou, 2012. "Investing in public investment: an index of public investment efficiency," Journal of Economic Growth, Springer, vol. 17(3), pages 235-266, September.
  15. Eleftherios Goulas & Athina Zervoyianni, 2013. "Growth, Deficits and Uncertainty: Theoretical Aspects and Empirical Evidence," Working Paper Series 53_13, The Rimini Centre for Economic Analysis.

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