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Infrastructures and productivity: an updated survey

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  • Angel de la Fuente

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Abstract

The relationship between infrastructures and productivity has been the subject of an ongoing debate during the last two decades. The available empirical evidence is inconclusive and its interpretation is complicated by econometric problems that have not been fully solved. This paper surveys the relevant literature, focusing on studies that estimate aggregate production functions or growth regressions, and extracts some tentative conclusions. On the whole, my reading of the evidence is that there are sufficient indications that public infrastructure investment contributes significantly to productivity growth, at least for countries where a saturation point has not been reached. The returns to such investment are probably quite high in early stages, when infrastructures are scarce and basic networks have not been completed, but fall sharply thereafter. Hence, appropriate infrastructure provision is probably a key input for development policy, even if it does not hold the key to rapid productivity growth in advanced countries where transportation and communications needs are already adequately served.

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Paper provided by Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) in its series UFAE and IAE Working Papers with number 831.10.

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Length: 63
Date of creation: 02 Jun 2010
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Handle: RePEc:aub:autbar:831.10

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Keywords: infrastructures; public capital; productivity;

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Cited by:
  1. Jason Timmins, 2005. "Is Infrastructure Productive? Evaluating the effects of specific infrastructure projects on firm productivity within New Zealand," Working Papers 05_14, Motu Economic and Public Policy Research.
  2. Angel De la Fuente, 2010. "Testing, not Modelling, the Impact of Cohesion Support: A Theoretical Framework and some Preliminary Results for the Spanish Regions," CESifo Working Paper Series 2918, CESifo Group Munich.
  3. Melo, Patricia C. & Graham, Daniel J. & Brage-Ardao, Ruben, 2013. "The productivity of transport infrastructure investment: A meta-analysis of empirical evidence," Regional Science and Urban Economics, Elsevier, vol. 43(5), pages 695-706.
  4. John Bradley & Gerhard Untiedt, 2012. "Assessing the impact of EU Cohesion Policy: What can economic models tell us?," HERMIN Economic Papers 2-2012, HERMIN.

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