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The Impact of Public Infrastructure on the Productivity of the Chilean Economy

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Abstract

The aim of the present study is to assess the effect of public infrastructures on the cost structure of the Chilean economy, and thereby on productivity, differentiating between two key sequential periods. A derived aim is to establish to what extent infrastructure and non-infrastructure capitals are related. Our conclusions appear to indicate that infrastructure capital reduces the production cost of the economy, thereby increasing productivity, only in the second period. In turn, non-infrastructure capital appears to be mostly unrelated to infrastructure capital in the first period, but to be clearly complementary in the second period. In addition, infrastructure capital and labour appear to be substitutive in the first period, but mostly unrelated in the second period. Complementarity, neutrality and substitution can to a large extent be explained by the dramatic differences in the institutional structures between these two periods.

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  • Jose Miguel Albala-Bertrand & Emmanouel C. Mamatzakis, 2001. "The Impact of Public Infrastructure on the Productivity of the Chilean Economy," Working Papers 435, Queen Mary University of London, School of Economics and Finance.
  • Handle: RePEc:qmw:qmwecw:wp435
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    1. Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-1196, September.
    2. J. M. Albala-Bertrand, 1999. "Industrial Interdependence Change in Chile: 1960-90 a comparison with Taiwan and South Korea," International Review of Applied Economics, Taylor & Francis Journals, vol. 13(2), pages 161-191.
    3. Feltenstein, Andrew & Ha, Jiming, 1995. "The Role of Infrastructure in Mexican Economic Reform," World Bank Economic Review, World Bank Group, vol. 9(2), pages 287-304, May.
    4. 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.
    5. E. C. Mamatzakis, 1999. "Testing for long run relationship between infrastructure and private capital productivity: a time series analysis for the Greek industry," Applied Economics Letters, Taylor & Francis Journals, vol. 6(4), pages 243-246.
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    1. Becerril-Torres, Osvaldo U. & Álvarez-Ayuso, Inmaculada C. & Del moral-Barrera, Laura E., 2010. "Do infrastructures influence the convergence of efficiency in Mexico?," Journal of Policy Modeling, Elsevier, vol. 32(1), pages 120-137, January.
    2. Brian Piper, 2014. "Factor-Specific Productivity," Working Papers 1401, Sam Houston State University, Department of Economics and International Business.
    3. Pierre-Richard Agénor, 2008. "Fiscal policy and endogenous growth with public infrastructure," Oxford Economic Papers, Oxford University Press, vol. 60(1), pages 57-87, January.
    4. Salvatore Amico Roxas & Antonio Cristofaro & Giuseppe Piroli, 2012. "Public Capital in the Private Sector of Italian Economy," EERI Research Paper Series EERI_RP_2012_19, Economics and Econometrics Research Institute (EERI), Brussels.
    5. Agenor, Pierre-Richard & Moreno-Dodson, Blanca, 2006. "Public infrastructure and growth : new channels and policy implications," Policy Research Working Paper Series 4064, The World Bank.
    6. Ward Romp & Jakob de Haan, 2007. "Public Capital and Economic Growth: A Critical Survey," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 8(s1), pages 6-52, April.
    7. Alfredo M. Pereira & Jorge M. Andraz, 2013. "On The Economic Effects Of Public Infrastructure Investment: A Survey Of The International Evidence," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 38(4), pages 1-37, December.
    8. Torrisi, Gianpiero, 2009. "Infrastructures and economic performance: a critical comparison across four approaches," MPRA Paper 18688, University Library of Munich, Germany.
    9. Serkan Arslanalp & Fabian Bornhorst & Sanjeev Gupta & Elsa Sze, 2010. "Public Capital and Growth," IMF Working Papers 10/175, International Monetary Fund.
    10. Jorge Martinez-Vazquez, 2013. "Fiscal Decentralization in Peru: A Perspective on Recent Developments and Future Challenges," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1324, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    11. Xinye Zheng & Feng Song & Yihua Yu & Shunfeng Song, 2015. "In Search of Fiscal Interactions: A Spatial Analysis of Chinese Provincial Infrastructure Spending," Review of Development Economics, Wiley Blackwell, vol. 19(4), pages 860-876, November.
    12. Torrisi, Gianpiero, 2009. "Public infrastructure: definition, classification and measurement issues," MPRA Paper 12990, University Library of Munich, Germany.
    13. 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.
    14. Jose Miguel Albala-Bertrand, 2006. "The Unlikeliness of an Economic Catastrophe: Localization & Globalization," Working Papers 576, Queen Mary University of London, School of Economics and Finance.
    15. Musisi, A.A., 2006. "Physical public infrastructure and private sector output/productivity in Uganda: a firm level analysis," ISS Working Papers - General Series 19182, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.

    More about this item

    Keywords

    Infrastructure; Chilean institutional change; Translog cost function;

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables

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