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Catching Up or Falling Behind? The Effect of Infrastructure Capital on Technology Adoption in Transition Economies

  • Schiffbauer, Marc

    (ESRI)

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    This paper demonstrates that a link between infrastructure capital and productivity growth can lead to multiple balanced growth equilibria if one accounts for the endogenous provision of infrastructure. 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 focus on the relationship between the provision of infrastructure capital and a country's innovative capacity. This is consistent with recent empirical evidence that reports a positive link between the two variables. The framework leads to bivariate causality between the rate of technical change and the provision of infrastructure services and generates scope for multiple strictly positive balanced growth equilibria.

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    File URL: http://www.esri.ie/research/research_areas/international_economics/dynreg/papers/WP27.pdf
    File Function: 2008
    Download Restriction: no

    Paper provided by Economic and Social Research Institute (ESRI) in its series Papers with number DYNREG27.

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    Length: 23 pages
    Date of creation: Feb 2008
    Date of revision:
    Handle: RePEc:esr:wpaper:dynreg27
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    1. Lars-Hendrik Roller & Leonard Waverman, 2001. "Telecommunications Infrastructure and Economic Development: A Simultaneous Approach," American Economic Review, American Economic Association, vol. 91(4), pages 909-923, September.
    2. Ingrid Ott & Stephen J. Turnovsky, 2006. "Excludable and Non-excludable Public Inputs: Consequences for Economic Growth," Economica, London School of Economics and Political Science, vol. 73(292), pages 725-748, November.
    3. 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.
    4. Peter L. Rousseau & Boyan Jovanovic, 2004. "General Purpose Technologies," 2004 Meeting Papers 103, Society for Economic Dynamics.
    5. Stephen Turnovsky, 1998. "Fiscal Policy, Elastic Labor Supply, and Endogenous Growth," Discussion Papers in Economics at the University of Washington 0068, Department of Economics at the University of Washington.
    6. Barro, R.J., 1988. "Government Spending In A Simple Model Of Endogenous Growth," RCER Working Papers 130, University of Rochester - Center for Economic Research (RCER).
    7. Douglas Holtz-Eakin & Amy Ellen Schwartz, 1994. "Infrastructure in a Structural Model of Economic Growth," NBER Working Papers 4824, National Bureau of Economic Research, Inc.
    8. Hellwig, Martin & Irmen, Andreas, 1999. "Endogenous Technical Change in a Competitive Economy," Sonderforschungsbereich 504 Publications 99-53, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    9. Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-96, September.
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