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How relevant is infrastructure to growth in East Asia ?

  • Seethepalli, Kalpana
  • Bramati, Maria Caterina
  • Veredas, David

This paper seeks to shed some light on the extent to which infrastructure sub-sectors - energy, telecommunications, water supply, sanitation, and transport - contributed to growth in East Asia during 1985-2004. It also attempts to provide additional insights on whether the relationship between infrastructure and growth depends on five additional variables: the degree of private participation in infrastructure, the quality of governance, the extent of rural-urban inequality in access to infrastructure services, country income levels, as well as geography. The findings show that greater stocks of infrastructure were indeed associated with higher growth. However, a more nuanced look at the sensitivity of infrastructure impacts on the five additional variables yields different results, with some sectors supporting conventional expectations and others yielding mixed or counter-intuitive results. In particular, the telecom and sanitation sectors yield statistically significant results supporting the a priori hypotheses; electricity and water infrastructure provide mixed results; and road infrastructure consistently contradicts a priori expectations. The results are consistent with the widely-accepted idea in policy research that infrastructure plays an important role in promoting growth, as well as with the viewpoint that certain countries'endowments influence the growth-related impacts of infrastructure.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4597.

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Date of creation: 01 Apr 2008
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Handle: RePEc:wbk:wbrwps:4597
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