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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. Spiros Bougheas & Panicos O. Demetriades & Theofanis P. Mamuneas, 2000. "Infrastructure, specialization, and economic growth," Canadian Journal of Economics, Canadian Economics Association, vol. 33(2), pages 506-522, May.
    2. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    3. 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.
    4. Levine, Ross & Loayza, Norman & Beck, Thorsten, 1999. "Financial intermediation and growth : Causality and causes," Policy Research Working Paper Series 2059, The World Bank.
    5. Catherine J. Morrison & Amy Ellen Schwartz, 1992. "State Infrastructure and Productive Performance," NBER Working Papers 3981, National Bureau of Economic Research, Inc.
    6. Alwyn Young, 1993. "Substitution and Complementarity in Endogenous Innovation," NBER Working Papers 4256, National Bureau of Economic Research, Inc.
    7. Robert J. Barro, 1988. "Government Spending in a Simple Model of Endogenous Growth," NBER Working Papers 2588, National Bureau of Economic Research, Inc.
    8. 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.
    9. Hellwig, Martin & Irmen, Andreas, 2001. "Endogenous Technical Change in a Competitive Economy," Journal of Economic Theory, Elsevier, vol. 101(1), pages 1-39, November.
    10. Lars-Hendrik Röller & Leonard Waverman, 1996. "Telecommunications Infrastructure and Economic Development: A Simultaneous Approach," CIG Working Papers FS IV 96-16, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    11. Turnovsky, Stephen J., 2000. "Fiscal policy, elastic labor supply, and endogenous growth," Journal of Monetary Economics, Elsevier, vol. 45(1), pages 185-210, February.
    12. Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-96, September.
    13. 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.
    14. Francesco Caselli, 2004. "Accounting for Cross-Country Income Differences," NBER Working Papers 10828, National Bureau of Economic Research, Inc.
    15. 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.
    16. John Fernald, 1997. "Roads to prosperity? assessing the link between public capital and productivity," International Finance Discussion Papers 592, Board of Governors of the Federal Reserve System (U.S.).
    17. Robert Ford & Pierre Poret, 1991. "Infrastructure and Private-Sector Productivity," OECD Economics Department Working Papers 91, OECD Publishing.
    18. 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.
    19. 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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