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The Joint Impact of Infrastructure and Institutions on Economic Growth

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  • Zergawu, Yitagesu Zewdu
  • Walle, Yabibal M.
  • Giménez Gómez, José M. (José Manuel)

Abstract

This paper examines the joint impact of infrastructure capital and institutional quality on economic growth using a large panel data set covering 120 countries and spanning the years 1980-2015. The empirical strategy involves estimating a simple growth model where, in addition to standard controls, infrastructure, institutional quality and their interaction are included as explanatory variables. Potential endogeneity concerns are addressed by means of GMM estimators that utilize internal instruments. We findd that the interaction terms between infrastructure capital and institutional quality have a positive and significant impact on economic growth. These results are robust to a variety of alternative specifications and institutional quality measures. Hence, our results suggest that maximizing returns from infrastructure development requires improving the quality of institutions. Keywords: infrastructure; institutions; growth; dynamic panel JEL classification: H54, F20

Suggested Citation

  • Zergawu, Yitagesu Zewdu & Walle, Yabibal M. & Giménez Gómez, José M. (José Manuel), 2018. "The Joint Impact of Infrastructure and Institutions on Economic Growth," Working Papers 2072/332584, Universitat Rovira i Virgili, Department of Economics.
    • Handle: RePEc:urv:wpaper:2072/332584
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    More about this item

    Keywords

    Infraestructura (Economia); Economia internacional; 33 - Economia;
    All these keywords.

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • F20 - International Economics - - International Factor Movements and International Business - - - General

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