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Infrastructures and Productivity: A Country-Sector Panel Analysis

Author

Listed:
  • Paolo E. Giordani
  • Alberto Petrucci
  • Alberto Franco Pozzolo

Abstract

This paper investigates the impact of physical infrastructures on sectoral total factor productivity (TFP). In the first part, a neoclassical growth model with multiple productive sectors and public capital (in the form of infrastructures) uncovers a long-run relationship between infrastructures and sectoral TFP. In the second part, a panel-cointegration analysis evaluates the long-run impact of 4 distinct types of infrastructures-transport, energy, ICT, health-on the TFPs of 22 manufacturing sectors in a sample of 65 (developed and emerging) countries between 1995 and 2018. We find that infrastructures are a positive and significant determinant of sectoral TFPs. A panel error-correction model also confirms that causality runs from infrastructures to TFPs. These results are robust to further empirical analysis conducted on sub-samples segmented by several dimensions. Our findings can inform policy in designing targeted interventions and prioritizing investment.

Suggested Citation

  • Paolo E. Giordani & Alberto Petrucci & Alberto Franco Pozzolo, 2025. "Infrastructures and Productivity: A Country-Sector Panel Analysis," Development Working Papers 505, Centro Studi Luca d'Agliano, University of Milano.
    • Handle: RePEc:csl:devewp:505
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    References listed on IDEAS

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    1. Caselli, Francesco, 2005. "Accounting for Cross-Country Income Differences," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 9, pages 679-741, Elsevier.
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    3. Allen,Robert C., 2009. "The British Industrial Revolution in Global Perspective," Cambridge Books, Cambridge University Press, number 9780521868273, Enero-Abr.
    4. Caselli, Francesco, 2005. "Accounting for cross-country income differences," LSE Research Online Documents on Economics 5266, London School of Economics and Political Science, LSE Library.
    5. David Canning & Peter Pedroni, 2008. "Infrastructure, Long‐Run Economic Growth And Causality Tests For Cointegrated Panels," Manchester School, University of Manchester, vol. 76(5), pages 504-527, September.
    6. Richard Hornbeck & Martin Rotemberg, 2024. "Growth Off the Rails: Aggregate Productivity Growth in Distorted Economies," Journal of Political Economy, University of Chicago Press, vol. 132(11), pages 3547-3602.
    7. Valerie A. Ramey, 2020. "The Macroeconomic Consequences of Infrastructure Investment," NBER Chapters, in: Economic Analysis and Infrastructure Investment, pages 219-268, National Bureau of Economic Research, Inc.
    8. Pavitt, Keith, 1984. "Sectoral patterns of technical change: Towards a taxonomy and a theory," Research Policy, Elsevier, vol. 13(6), pages 343-373, December.
    9. Caselli, Francesco, 2005. "Accounting for cross-country income differences," LSE Research Online Documents on Economics 3567, London School of Economics and Political Science, LSE Library.
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    Keywords

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    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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