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Network effects of the productivity of infrastructure in developing countries

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Author Info
Hurlin, Christophe

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Abstract

Using panel data models, the author examines the threshold effects of the productivity of infrastructure investment in developing countries. He considers various specifications of an augmented production function that allow for endogenous thresholds. More precisely, these specifications are tested in a panel threshold regression model. The author's main robust result is the presence of strong threshold effects in the relationship between output and private and public inputs. Whatever the transition mechanism used, the testing procedures lead to strong rejection of the linearity of this relationship. In particular, the productivity of infrastructure investment generally exhibits some network effects. When the available stock of infrastructure is very low, investment in this sector has the same productivity as noninfrastructure investment. On the contrary, when a minimum network is available, the marginal productivity of infrastructure investment is generally largely greater than the productivity of other investment. Finally, when the main network is achieved, its marginal productivity becomes similar to the productivity of other investment.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3808.

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Date of creation: 01 Jan 2006
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Handle: RePEc:wbk:wbrwps:3808

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Keywords: Economic Theory&Research; Investment and Investment Climate; Public Sector Economics&Finance; Non Bank Financial Institutions; Technology Industry;

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  7. Canning, David & Bennathan, Esra, 2000. "The social rate of return on infrastructure investments," Policy Research Working Paper Series 2390, The World Bank. [Downloadable!]
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Cited by:
(explanations, 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.)

  1. Nicolas Canry & Julien Fouquau & Sébastien Lechevalier, 2007. "Price Dynamics in Japan (1981-2001): A StructuralAnalysis of Mechanisms in the Goods and LaborMarkets," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00140624_v1, HAL. [Downloadable!]
    Other versions:
  2. Julien Fouquau, 2008. "Threshold effects in Okun’s Law: a panel data analysis," Economics Bulletin, Economics Bulletin, vol. 5(33), pages 1-14. [Downloadable!]
  3. Agenor, Pierre-Richard & Moreno-Dodson, Blanca, 2006. "Public infrastructure and growth : new channels and policy implications," Policy Research Working Paper Series 4064, The World Bank. [Downloadable!]
  4. Straub, Stephane, 2008. "Infrastructure and development : a critical appraisal of the macro level literature," Policy Research Working Paper Series 4590, The World Bank. [Downloadable!]
    Other versions:
  5. Pierre-Richard Agénor, 2006. "A Theory of Infrastructure-led Development," Centre for Growth and Business Cycle Research Discussion Paper Series 83, Economics, The Univeristy of Manchester. [Downloadable!]
  6. Pierre-Richard Agénor, 2006. "A Theory of Infrastructure-led Development," The School of Economics Discussion Paper Series 0640, Economics, The University of Manchester. [Downloadable!]
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