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Network effects of the productivity of infrastructure in developing countries

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  • Hurlin, Christophe

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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Bibliographic Info

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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Cited by:
  1. repec:hal:journl:halshs-00140624 is not listed on IDEAS
  2. Klinedinst, Mark, 2007. "Cooperative comebacks: resilience in the face of the Hurricane Katrina Catastrophe (New Orleans and Southern Mississippi, May 2005–May 2006)," MPRA Paper 28521, University Library of Munich, Germany.
  3. Stephane Straub, 2008. "Infrastructure and Development: A Critical Appraisal of the Macro-level Literature," ESE Discussion Papers 178, Edinburgh School of Economics, University of Edinburgh.
  4. World Bank, 2012. "Reshaping Economic Geography of East Africa : From Regional to Global Integration, Volume 2. Technical Annexes," World Bank Other Operational Studies 11916, The World Bank.
  5. Nicolas Canry & Julien Fouquau & Sébastien Lechevalier, 2010. "Price Dynamics In Japan (1981-2001): A Structural Analysis Of Mechanisms In The Goods And Labor Markets," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 53(3/4), pages 357-374.
  6. 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.
  7. Julien Fouquau, 2008. "Threshold effects in Okun's law: a panel data analysis," Post-Print hal-00565477, HAL.
  8. Klinedinst, Mark, 2008. "A strength of credit unions: employee productivity of credit unions versus banks in the U.S.?," MPRA Paper 26296, University Library of Munich, Germany.
  9. Robin Carruthers, 2012. "Transport Infrastructure for MED11 Countries," CASE Network Reports 0108, CASE-Center for Social and Economic Research.
  10. 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.
  11. Straub, Stephane, 2008. "Infrastructure and growth in developing countries : recent advances and research challenges," Policy Research Working Paper Series 4460, The World Bank.
  12. Kessides, Ioannis N. & Benjamin, Nancy C., 2012. "Regionalizing infrastructure for deepening market integration: the case of East Africa," Policy Research Working Paper Series 6113, The World Bank.

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