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How Productive Is Infrastructure? A New Approach and Evidence from Rural India

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  • Xiaobo Zhang
  • Shenggen Fan

Abstract

There have been competing arguments about the effect of public infrastructure on productivity. Level-based and debate-based regressions often lead to different estimates. To help reconcile this difference, this article applies the GMM method to first test for causality to check for length of lagged relationships and the existence of reverse causality before specifying a final model and deciding the estimation procedure. This approach is illustrated using a panel data set for India. The results show that infrastructure development in India is productive, providing supporting evidence to reverse the trend of declining investment in rural infrastructure. Copyright 2004, Oxford University Press.

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  • Xiaobo Zhang & Shenggen Fan, 2004. "How Productive Is Infrastructure? A New Approach and Evidence from Rural India," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(2), pages 492-501.
    • Handle: RePEc:oup:ajagec:v:86:y:2004:i:2:p:492-501
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