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Calling for innovations - infrastructure and sources of growth

  • Schiffbauer, Marc

    (Bonn Graduate School of Economics, University of Bonn)

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    This paper analyzes the impact of infrastructure capital on different sources of economic growth. Starting with the contribution of Barro (1990), the literature on infrastructure and growth mainly focuses on the relation between private and public capital investments. In contrast, we demonstrate a link between (telecommunication) infrastructure capital and endogenous technological change in the context of an dynamic panel estimation applying aggregate country- as well as U.S. firm-level data. The main empirical finding is that the increase in telecommunication infrastructure during the last 30 years enhanced R&D investments but did not affect the accumulation of physical or human capital in our sample. Moreover, we provide an extended R&D growth model, which emphasizes a cost-reducing feature of infrastructure capital, to demonstrate a potential link between the level of infrastructure capital and endogenous technological change.

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    Paper provided by Economic and Social Research Institute (ESRI) in its series Papers with number DYNREG18.

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    Length: 32 pages
    Date of creation: 2007
    Date of revision:
    Handle: RePEc:esr:wpaper:dynreg18
    Note: DYNREG Research Project – Dynamic Regions in a Knowledge-Driven Global Economy: Lessons and Policy Implications for the European Union
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    1. Kosempel, Stephen, 2004. "Finite lifetimes and government spending in an endogenous growth model," Journal of Economics and Business, Elsevier, vol. 56(3), pages 197-210.
    2. Hellwig, Martin & Irmen, Andreas, 2001. "Endogenous Technical Change in a Competitive Economy," Journal of Economic Theory, Elsevier, vol. 101(1), pages 1-39, November.
    3. Lars-Hendrik Röller & Leonard Waverman, 1996. "Telecommunications Infrastructure and Economic Development: A Simultaneous Approach," CIG Working Papers FS IV 96-16, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    4. Caselli, Francesco, 2004. "Accounting for Cross-Country Income Differences," CEPR Discussion Papers 4703, C.E.P.R. Discussion Papers.
    5. Alwyn Young, 1993. "Substitution and Complementarity in Endogenous Innovation," NBER Working Papers 4256, National Bureau of Economic Research, Inc.
    6. 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 S103-26, October.
    7. Morrison, Catherine J & Schwartz, Amy Ellen, 1996. "State Infrastructure and Productive Performance," American Economic Review, American Economic Association, vol. 86(5), pages 1095-1111, December.
    8. Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
    9. M. Ishaq Nadiri & Theofanis P. Mamuneas, 1991. "The Effects of Public Infrastructure and R&D Capital on the Cost Structure and Performance of U.S. Manufacturing Industries," NBER Working Papers 3887, National Bureau of Economic Research, Inc.
    10. Robert Ford & Pierre Poret, 1991. "Infrastructure and Private-Sector Productivity," OECD Economics Department Working Papers 91, OECD Publishing.
    11. Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-96, September.
    12. Ross Levine & Norman Loayza & Thorsten Beck, 2002. "Financial Intermediation and Growth: Causality and Causes," Central Banking, Analysis, and Economic Policies Book Series, in: Leonardo Hernández & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Se (ed.), Banking, Financial Integration, and International Crises, edition 1, volume 3, chapter 2, pages 031-084 Central Bank of Chile.
    13. Stephen Turnovsky, 1998. "Fiscal Policy, Elastic Labor Supply, and Endogenous Growth," Working Papers 0068, University of Washington, Department of Economics.
    14. John G. Fernald, 1997. "Roads to prosperity? assessing the link between public capital and productivity," International Finance Discussion Papers 592, Board of Governors of the Federal Reserve System (U.S.).
    15. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
    16. Spiros Bougheas & Panicos O. Demetriades & Theofanis P. Mamuneas, 2000. "Infrastructure, specialization, and economic growth," Canadian Journal of Economics, Canadian Economics Association, vol. 33(2), pages 506-522, May.
    17. Sugata Ghosh, 2002. "On public investment, long-run growth, and the real exchange rate," Oxford Economic Papers, Oxford University Press, vol. 54(1), pages 72-90, January.
    18. Holtz-Eakin, Douglas & Schwartz, Amy Ellen, 1995. "Infrastructure in a structural model of economic growth," Regional Science and Urban Economics, Elsevier, vol. 25(2), pages 131-151, April.
    19. John G. Fernald & Shanthi Ramnath, 2004. "The acceleration in U.S. total productivity after 1995: the role of information technology," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q I, pages 52-67.
    20. Barro, Robert J & Lee, Jong Wha, 1996. "International Measures of Schooling Years and Schooling Quality," American Economic Review, American Economic Association, vol. 86(2), pages 218-23, May.
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