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Public Infrastructure and Economic Growth in Mexico


  • Antonio Noriega
  • Matias Fontenla


We develop a model where investment in infrastructure complements private investment. We then provide time series evidence for Mexico on both the impact of public infrastructure on output, and on the optimality with which levels of infrastructure have been set. In particular, we look at the long-run effects of shocks to infrastructure on real output. We compute Long-Run Derivatives for kilowatts of electricity, roads and phone lines, and find that shocks to infrastructure have positive and significant effects on real output for all three measures of infrastructure. For electricity and roads, the effect becomes significant after 7 and 8 years, respectively, whereas for phones, the effect on growth is significant only after 13 years. These effects of infrastructure on output are in agreement with growth models where long-run growth is driven by endogenous factors of production. However, our results indicate that none of these variables seem to be set at growth maximizing levels.

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  • Antonio Noriega & Matias Fontenla, 2005. "Public Infrastructure and Economic Growth in Mexico," DEGIT Conference Papers c010_058, DEGIT, Dynamics, Economic Growth, and International Trade.
  • Handle: RePEc:deg:conpap:c010_058

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    References listed on IDEAS

    1. Pierre Perron & Serena Ng, 1996. "Useful Modifications to some Unit Root Tests with Dependent Errors and their Local Asymptotic Properties," Review of Economic Studies, Oxford University Press, vol. 63(3), pages 435-463.
    2. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
    3. Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-1196, September.
    4. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    5. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 407-443.
    6. Pantula, Sastry G., 1989. "Testing for Unit Roots in Time Series Data," Econometric Theory, Cambridge University Press, vol. 5(02), pages 256-271, August.
    7. Serena Ng & Pierre Perron, 2001. "LAG Length Selection and the Construction of Unit Root Tests with Good Size and Power," Econometrica, Econometric Society, vol. 69(6), pages 1519-1554, November.
    8. Fisher, Mark E & Seater, John J, 1993. "Long-Run Neutrality and Superneutrality in an ARIMA Framework," American Economic Review, American Economic Association, vol. 83(3), pages 402-415, June.
    9. Dickey, David A & Pantula, Sastry G, 1987. "Determining the Ordering of Differencing in Autoregressive Processes," Journal of Business & Economic Statistics, American Statistical Association, vol. 5(4), pages 455-461, October.
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    Cited by:

    1. Urrunaga, Roberto & Aparicio, Carlos, 2012. "Infrastructure and economic growth in Peru," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    2. Thomas M. Fullerton Jr & Azucena González Monzón & Adam G. Walke, 2013. "Physical Infrastructure and Economic Growth in El Paso," Economic Development Quarterly, , vol. 27(4), pages 363-373, November.

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