This paper demonstrates that a link between infrastructure capital and productivity growth can lead to multiple balanced growth equilibria if one accounts for the endogenous provision of infrastructure. 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 focus on the relationship between the provision of infrastructure capital and a country's innovative capacity. This is consistent with recent empirical evidence that reports a positive link between the two variables. The framework leads to bivariate causality between the rate of technical change and the provision of infrastructure services and generates scope for multiple strictly positive balanced growth equilibria.
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Paper provided by Economic and Social Research Institute (ESRI) in its series Papers with number
DYNREG27.
Length: 23 pages Date of creation: Feb 2008 Date of revision: Handle: RePEc:esr:wpaper:dynreg27
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Boyan Jovanovic & Peter L. Rousseau, 2005.
"General Purpose Technologies,"
NBER Working Papers
11093, National Bureau of Economic Research, Inc.
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