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Revisited the Relationship Between Economic Growth and Transport Infrastructure in India: An Empirical Study

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  • Ghosh, Prabir Kumar
  • Dinda, Soumyananda

Abstract

This study empirically re-examines the relationship between transport infrastructure and economic growth in India for the period 1990–2017. Multivariate dynamic models are applied to estimate the relationship between economic growth and different modes of transport infrastructure namely road, rail and air transports in the vector error correction model framework. The results reveal that road and air transports have significant positive contribution to economic growth in the long-run while rail transport is insignificant. This study further examines the said issue using unit free index variables and has constructed a composite index of transport infrastructure using principal component analysis to analyze the nexus between aggregate transport infrastructure and economic growth in India in the post globalization era. The results of the study indicate the bidirectional causality between aggregate transport infrastructure and economic growth. Results of this study suggest incorporating feedback issue in policy formulations.

Suggested Citation

  • Ghosh, Prabir Kumar & Dinda, Soumyananda, 2019. "Revisited the Relationship Between Economic Growth and Transport Infrastructure in India: An Empirical Study," MPRA Paper 116876, University Library of Munich, Germany, revised Feb 2021.
    • Handle: RePEc:pra:mprapa:116876
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    More about this item

    Keywords

    Multivariate model; Composite Index; Transport Infrastructure; Globalization; VECM; PCA; Causality.;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

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