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Calling for innovations - infrastructure and sources of growth

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  • Schiffbauer, Marc

    (Bonn Graduate School of Economics, University of Bonn)

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    Abstract

    This paper analyzes the impact of infrastructure capital on different sources of economic growth. Starting with the contribution of Barro (1990), the literature on infrastructure and growth mainly focuses on the relation between private and public capital investments. In contrast, we demonstrate a link between (telecommunication) infrastructure capital and endogenous technological change in the context of an dynamic panel estimation applying aggregate country- as well as U.S. firm-level data. The main empirical finding is that the increase in telecommunication infrastructure during the last 30 years enhanced R&D investments but did not affect the accumulation of physical or human capital in our sample. Moreover, we provide an extended R&D growth model, which emphasizes a cost-reducing feature of infrastructure capital, to demonstrate a potential link between the level of infrastructure capital and endogenous technological change.

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    File URL: http://www.esri.ie/research/research_areas/international_economics/dynreg/papers/Working_Paper_No._18.pdf
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    Bibliographic Info

    Paper provided by Economic and Social Research Institute (ESRI) in its series Papers with number DYNREG18.

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    Length: 32 pages
    Date of creation: 2007
    Date of revision:
    Handle: RePEc:esr:wpaper:dynreg18

    Note: DYNREG Research Project – Dynamic Regions in a Knowledge-Driven Global Economy: Lessons and Policy Implications for the European Union
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    Keywords: DYNREG;

    References

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    1. Francesco Caselli, 2005. "Accounting for Cross-Country Income Differences," CEP Discussion Papers dp0667, Centre for Economic Performance, LSE.
    2. Robert Ford & Pierre Poret, 1991. "Infrastructure and Private-Sector Productivity," OECD Economics Department Working Papers 91, OECD Publishing.
    3. Alwyn Young, 1993. "Substitution and Complementarity in Endogenous Innovation," NBER Working Papers 4256, National Bureau of Economic Research, Inc.
    4. Nadiri, M Ishaq & Mamuneas, Theofanis P, 1994. "The Effects of Public Infrastructure and R&D Capital on the Cost Structure and Performance of U.S. Manufacturing Industries," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 22-37, February.
    5. Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
    6. Lars-Hendrik Roller & Leonard Waverman, 2001. "Telecommunications Infrastructure and Economic Development: A Simultaneous Approach," American Economic Review, American Economic Association, vol. 91(4), pages 909-923, September.
    7. Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-96, September.
    8. Panicos O. Demetriades & Spiros Bougheas, 1995. "Infrastructure, Specialisation and Economic Growth," Keele Department of Economics Discussion Papers (1995-2001) 95/15, Department of Economics, Keele University.
    9. Barro, Robert J & Lee, Jong Wha, 1996. "International Measures of Schooling Years and Schooling Quality," American Economic Review, American Economic Association, vol. 86(2), pages 218-23, May.
    10. Turnovsky, Stephen J., 2000. "Fiscal policy, elastic labor supply, and endogenous growth," Journal of Monetary Economics, Elsevier, vol. 45(1), pages 185-210, February.
    11. Catherine J. Morrison & Amy Ellen Schwartz, 1992. "State Infrastructure and Productive Performance," NBER Working Papers 3981, National Bureau of Economic Research, Inc.
    12. Hellwig, Martin & Irmen, Andreas, 2001. "Endogenous Technical Change in a Competitive Economy," Journal of Economic Theory, Elsevier, vol. 101(1), pages 1-39, November.
    13. Barro, R.J., 1988. "Government Spending In A Simple Model Of Endogenous Growth," RCER Working Papers 130, University of Rochester - Center for Economic Research (RCER).
    14. Ross Levine & Norman Loayza & Thorsten Beck, 2002. "Financial Intermediation and Growth: Causality and Causes," Central Banking, Analysis, and Economic Policies Book Series, in: Leonardo Hernández & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (S (ed.), Banking, Financial Integration, and International Crises, edition 1, volume 3, chapter 2, pages 031-084 Central Bank of Chile.
    15. Kosempel, Stephen, 2004. "Finite lifetimes and government spending in an endogenous growth model," Journal of Economics and Business, Elsevier, vol. 56(3), pages 197-210.
    16. Sugata Ghosh, 2002. "On public investment, long-run growth, and the real exchange rate," Oxford Economic Papers, Oxford University Press, vol. 54(1), pages 72-90, January.
    17. Douglas Holtz-Eakin & Amy Ellen Schwartz, 1994. "Infrastructure in a Structural Model of Economic Growth," NBER Working Papers 4824, National Bureau of Economic Research, Inc.
    18. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
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