The aim of the present study is to assess the effect of public infrastructures on the cost structure of the Chilean economy, and thereby on productivity, differentiating between two key sequential periods. A derived aim is to establish to what extent infrastructure and non-infrastructure capitals are related. Our conclusions appear to indicate that infrastructure capital reduces the production cost of the economy, thereby increasing productivity, only in the second period. In turn, non-infrastructure capital appears to be mostly unrelated to infrastructure capital in the first period, but to be clearly complementary in the second period. In addition, infrastructure capital and labour appear to be substitutive in the first period, but mostly unrelated in the second period. Complementarity, neutrality and substitution can to a large extent be explained by the dramatic differences in the institutional structures between these two periods.
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Paper provided by Queen Mary, University of London, Department of Economics in its series Working Papers with number
435.
Find related papers by JEL classification: H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
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