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The joint impact of infrastructure and institutions on economic growth

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  • Zergawu, Yitagesu Zewdu
  • Walle, Yabibal M.
  • Giménez-Gómez, José-Manuel

Abstract

This paper examines the joint impact of infrastructure capital and institutional quality on economic growth using a large panel dataset covering 99 countries and spanning the years 1980–2015. The empirical strategy involves estimating a simple growth model where, in addition to standard controls, infrastructure, institutional quality, and their interaction are included as explanatory variables. Potential endogeneity concerns are addressed by employing generalized method of moments estimators that utilize internal instruments. We find that the interaction terms between infrastructure capital and institutional quality show a positive and significant impact on economic growth. These results are robust to a variety of alternative specifications and institutional quality measures. Hence, our results suggest that maximizing returns from infrastructure capital requires improving the quality of institutions.

Suggested Citation

  • Zergawu, Yitagesu Zewdu & Walle, Yabibal M. & Giménez-Gómez, José-Manuel, 2020. "The joint impact of infrastructure and institutions on economic growth," Journal of Institutional Economics, Cambridge University Press, vol. 16(4), pages 481-502, August.
    • Handle: RePEc:cup:jinsec:v:16:y:2020:i:4:p:481-502_8
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    Cited by:

    1. Finocchiaro Castro ,Massimo & Guccio, Calogero, 2023. "New wine in old bottle: Exploring the Corruption-inefficiency nexus using endogenous stochastic frontier approach," EconStor Preprints 275730, ZBW - Leibniz Information Centre for Economics.
    2. Pham Thai Binh & Trang Thi Thuy Nguyen, 2024. "Do institutions advocate tax simplification? Insights from a panel of 88 countries," Economic Change and Restructuring, Springer, vol. 57(3), pages 1-39, June.
    3. Pradhan, Rudra P. & Bennett, Sara E. & Nair, Mahendhiran S. & Arvin, Mak B., 2023. "Does foreign aid procurement in resource-rich countries depend on these countries’ financial development and institutional quality? Evidence from PVECM and quantile-on-quantile regression," Socio-Economic Planning Sciences, Elsevier, vol. 88(C).
    4. Tsopmo, Pierre Christian & Mbouombouo Vessah, Salim Ahmed & Soumtang Bime, Valentine & Mondjeli Mwa Ndjokou, Itchoko Motande, 2024. "Do African countries avoid the curse of natural resources on social cohesion?," Resources Policy, Elsevier, vol. 98(C).
    5. Massimo Finocchiaro Castro & Calogero Guccio, 2025. "Exploring the corruption‐inefficiency nexus using an endogenous stochastic frontier analysis," Southern Economic Journal, John Wiley & Sons, vol. 91(3), pages 811-849, January.
    6. Walle, Yabibal Mulualem, 2022. "Determinants of social cohesion: Cross-country evidence," IDOS Discussion Papers 18/2022, German Institute of Development and Sustainability (IDOS).
    7. Samson Edo & Osaro Oigiangbe, 2025. "Public institutions and infrastructure: the interactive effect on economic growth in sub-Saharan Africa," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 27(2), pages 624-643, August.
    8. Idrissa Yaya Diandy & Alioune Badara Seck, 2021. "Infrastructures physiques et croissance économique en Afrique de l'Ouest: Le rôle des institutions," African Development Review, African Development Bank, vol. 33(1), pages 154-165, March.
    9. Luigi Aldieri & Cristian Barra & Nazzareno Ruggiero & Concetto Paolo Vinci, 2023. "Corruption and firms’ efficiency: international evidence using an instrumental variable approach," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 40(2), pages 731-759, July.
    10. Foster,Vivien & Gorgulu,Nisan & Straub,Stéphane & Vagliasindi,Maria, 2023. "The Impact of Infrastructure on Development Outcomes: A Qualitative Review of Four Decades of Literature," Policy Research Working Paper Series 10343, The World Bank.
    11. Panagiota Makrychoriti & Fotios Pasiouras & Menelaos Tasiou, 2022. "Financial stress and economic growth: The moderating role of trust," Kyklos, Wiley Blackwell, vol. 75(1), pages 48-74, February.
    12. Kossi Edem Baita & Kwami Ossadzifo Wonyra, 2023. "Effet global du genre dans le développement des chaînes de valeur mondiales dans le contexte africain," African Development Review, African Development Bank, vol. 35(4), pages 365-375, December.
    13. Jinrui Zhang & Ruilian Zhang & Junzhuo Xu & Jie Wang & Guoqing Shi, 2021. "Infrastructure Investment and Regional Economic Growth: Evidence from Yangtze River Economic Zone," Land, MDPI, vol. 10(3), pages 1-14, March.
    14. Chandan Sharma & Ritesh Kumar Mishra, 2025. "Do corruption and resource endowments curse jobs? Worldwide empirical evidence," Economic Change and Restructuring, Springer, vol. 58(4), pages 1-44, August.
    15. Caserta, Maurizio & Ferrante, Livio & Ferrara, Paolo Lorenzo & Fontana, Stefania, 2025. "Too big to be efficient? The role of size in public procurement performance," Economic Analysis and Policy, Elsevier, vol. 86(C), pages 2049-2069.
    16. John Bosco Nnyanzi & Susan Kavuma & John Sseruyange & Aisha Nanyiti, 2022. "The manufacturing output effects of infrastructure development, liberalization and governance: evidence from Sub-Saharan Africa," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 49(2), pages 369-400, June.
    17. Yingying Shi, 2024. "Corruption, technical efficiency and total factor productivity growth: empirical evidence from China," Economic Change and Restructuring, Springer, vol. 57(6), pages 1-24, December.

    More about this item

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • F20 - International Economics - - International Factor Movements and International Business - - - General

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