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Infrastructure and sectoral output along the road to development

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  • Felix Rioja

Abstract

Public infrastructure is one of the foundations for economic growth. Empirical research has found that public infrastructure can have different effects in different sectors of the economy. The theoretical literature, however, has concentrated in one-sector growth models. This paper develops a three-sector model (agriculture, manufacturing and services) to study the effects of infrastructure. The model is calibrated and solved numerically using parameters from seven Latin American countries. Results show that the largest gains would have been obtained at an early stage of development in the decade of the 1960s. The seven Latin American countries would have also benefited from additional public investment in the 1990s, especially the service sector. This result also has implications for the early 2000s, as infrastructure expenditures have not increased from the 1990s levels. JEL Classification: O4, H5

Suggested Citation

  • Felix Rioja, 2004. "Infrastructure and sectoral output along the road to development," International Economic Journal, Taylor & Francis Journals, vol. 18(1), pages 49-64.
    • Handle: RePEc:taf:intecj:v:18:y:2004:i:1:p:49-64
    DOI: 10.1080/1351161042000180638
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    References listed on IDEAS

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    1. Suescun, Rodrigo, 2020. "A tool for fiscal policy planning in a medium-term fiscal framework: The FMM-MTFF model," Economic Modelling, Elsevier, vol. 88(C), pages 431-446.

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    Keywords

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    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • H5 - Public Economics - - National Government Expenditures and Related Policies

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