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Effect of transportation infrastructure on economic growth in India: The VECM approach

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  • Pradhan, Rudra P.
  • Bagchi, Tapan P.

Abstract

This paper examines the effect of transportation (road and rail) infrastructure on economic growth in India over the period 1970–2010. Using Vector Error Correction Model (VECM), the paper finds bidirectional causality between road transportation and economic growth. It also finds bidirectional causality between road transportation and capital formation, bidirectional causality between gross domestic capital formation and economic growth, unidirectional causality from rail transportation to economic growth and unidirectional causality from rail transportation to gross capital formation. The paper suggests that expansion of transport infrastructure (both road and rail) along with gross capital formation will lead to substantial growth of the Indian economy. Therefore, within its stated scope, this study suggests that a suitable transport policy should be retained to boost transportation infrastructure and hence sustainable economic growth in India.

Suggested Citation

  • Pradhan, Rudra P. & Bagchi, Tapan P., 2013. "Effect of transportation infrastructure on economic growth in India: The VECM approach," Research in Transportation Economics, Elsevier, vol. 38(1), pages 139-148.
  • Handle: RePEc:eee:retrec:v:38:y:2013:i:1:p:139-148
    DOI: 10.1016/j.retrec.2012.05.008
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    Cited by:

    1. Samir, Saidi & Shahbaz, Muhammad & Akhtar, Pervaiz, 2018. "The Long-Run Relationship between Transport Energy Consumption and Transport Infrastructure on Economic Growth in MENA Countries," MPRA Paper 85037, University Library of Munich, Germany, revised 06 Mar 2018.
    2. Deng, Ping & Lu, Shiqing & Xiao, Hanbin, 2013. "Evaluation of the relevance measure between ports and regional economy using structural equation modeling," Transport Policy, Elsevier, vol. 27(C), pages 123-133.
    3. Arvin, Mak B. & Pradhan, Rudra P. & Norman, Neville R., 2015. "Transportation intensity, urbanization, economic growth, and CO2 emissions in the G-20 countries," Utilities Policy, Elsevier, vol. 35(C), pages 50-66.
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    6. BADALYAN, Gohar & HERZFELD, Thomas & RAJCANIOVA, Miroslava, 2014. "Transport Infrastructure And Economic Growth: Panel Data Approach For Armenia, Georgia And Turkey," Review of Agricultural and Applied Economics (RAAE), Faculty of Economics and Management, Slovak Agricultural University in Nitra Provider-Homepage: http://www.roaae.org;Association of Agricultural Economists in Slovakia (APES), vol. 17(2).
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    9. Park, Jin Suk & Seo, Young-Joon, 2016. "The impact of seaports on the regional economies in South Korea: Panel evidence from the augmented Solow model," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 85(C), pages 107-119.
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    13. Bernadette Biatour & Chantal Kegels & Jan van der Linden & Dirk Verwerft, 2017. "Working Paper 01-17 - Public Investment in Belgium - Current State and Economic Impact," Working Papers 1701, Federal Planning Bureau, Belgium.
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    Keywords

    Transport infrastructure; Economic growth; VECM;

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