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Economic growth in South Asia: Role of infrastructure

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  • Pravakar Sahoo
  • Ranjan Kumar Dash

Abstract

We examine the output elasticity of infrastructure for four South Asian countries viz., India, Pakistan, Bangladesh, and Sri Lanka using panel cointegration techniques for the period 1980--2005. In this context, we develop an index of infrastructure stocks and investigate the impact of infrastructure on output. The study finds a long-run equilibrium relationship between output and infrastructure along with other relevant variables, such as gross domestic capital formation (GDCF), labor force, international trade and human capital. The results reveal that GDCF, labor force, export and expenditure on human capital exhibit a positive contribution to output. More importantly, infrastructure development contributes significantly to output growth in South Asia. Further, the panel causality analysis shows that there is mutual feedback between total output and infrastructure development.

Suggested Citation

  • Pravakar Sahoo & Ranjan Kumar Dash, 2012. "Economic growth in South Asia: Role of infrastructure," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 21(2), pages 217-252, January.
  • Handle: RePEc:taf:jitecd:v:21:y:2012:i:2:p:217-252
    DOI: 10.1080/09638191003596994
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    References listed on IDEAS

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    1. Peter Pedroni & David Canning, 2004. "The Effect of Infrastructure on Long Run Economic Growth," Department of Economics Working Papers 2004-04, Department of Economics, Williams College.
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    1. repec:eee:eneeco:v:63:y:2017:i:c:p:199-212 is not listed on IDEAS
    2. Shahbaz, Muhammad & Hoang, Thi Hong Van & Mahalik, Mantu Kumar & Roubaud, David, 2017. "Energy consumption, financial development and economic growth in India: New evidence from a nonlinear and asymmetric analysis," Energy Economics, Elsevier, vol. 63(C), pages 199-212.
    3. Patnaik, Ila & Pundit, Madhavi, 2014. "Is India's Long-Term Trend Growth Declining?," ADB Economics Working Paper Series 424, Asian Development Bank.
    4. repec:eee:transa:v:100:y:2017:i:c:p:319-336 is not listed on IDEAS
    5. Sahoo, Pravakar & Dash, Ranjan Kumar & Nataraj, Geethanjali, 2010. "Infrastructure development and economic growth in China," IDE Discussion Papers 261, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    6. Isabelle Joumard & Urban Sila & Hermes Morgavi, 2015. "Challenges and Opportunities of India's Manufacturing Sector," OECD Economics Department Working Papers 1183, OECD Publishing.
    7. repec:gam:jsusta:v:9:y:2017:i:11:p:2108-:d:119535 is not listed on IDEAS
    8. Sahoo, Pravakar & Dash, Ranjan Kumar, 2014. "India's surge in modern services exports: Empirics for policy," Journal of Policy Modeling, Elsevier, vol. 36(6), pages 1082-1100.
    9. Ghulam Akhmat & Khalid Zaman & Tan Shukui, 2014. "Impact of financial development on SAARC’S human development," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(5), pages 2801-2816, September.
    10. Patnaik, Ila & Pundit, Madhavi, 2016. "Where is India's Growth Headed?," Working Papers 16/159, National Institute of Public Finance and Policy.
    11. Ila Patnaik, 2016. "Where is India’s Growth Headed?," Working Papers id:8436, eSocialSciences.
    12. Aniruddha Mitra & James Bang & Phanindra Wunnava, 2014. "Financial liberalization and the selection of emigrants: a cross-national analysis," Empirical Economics, Springer, vol. 47(1), pages 199-226, August.
    13. Tong, Tingting & Yu, Edward & Roberts, Roland K., 2014. "Dynamics of Transport Infrastructure, Exports and Economic Growth in the United States," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 53(1).
    14. Pradeep Agrawal, 2015. "Infrastructure in India: Challenges and the Way Ahead," Working Papers id:7692, eSocialSciences.
    15. Ranjan Ku Dash & Pravakar Sahoo, 2010. "Economic growth in India: the role of physical and social infrastructure," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 13(4), pages 373-385.
    16. Khan, Muhammad Azhar & Khan, Muhammad Zahir & Zaman, Khalid & Irfan, Danish & Khatab, Humera, 2014. "Questing the three key growth determinants: Energy consumption, foreign direct investment and financial development in South Asia," Renewable Energy, Elsevier, vol. 68(C), pages 203-215.
    17. repec:rej:journl:v:20:y:2017:i:63:p:126-146 is not listed on IDEAS

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