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Electricity, Highways and Manufacturing Growth: A Cost Based Estimate

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  • Alejandro Castañeda Sabido

    (Centro de Estudios Económicos, El Colegio de México, A.C.)

Abstract

This paper studies the rqle of electricity and highways on the Mexican manufacturing sector. The paper uses a weighted aggregate in put of labor and capital (with weights equal to their share in costs) and a weighted measure of infrastructure to estimate jointly the elasticity of infrastructure and the degree of internal returns to scale. 1 pool two digit industries to obtain the estimates for the whole manufacturing sec tor. This paper follows the first order tradition initiated by Solow (1957) and Hall (1988a, b). For the entire manufacturing sector, 1 find that a weighted average index of both types of infrastructure has a significant effect on manufacturing growth. At the sectoral level the evidence is mixed.

Suggested Citation

  • Alejandro Castañeda Sabido, 2002. "Electricity, Highways and Manufacturing Growth: A Cost Based Estimate," Economía Mexicana NUEVA ÉPOCA, CIDE, División de Economía, vol. 0(1), pages 59-77, January-J.
    • Handle: RePEc:emc:ecomex:v:11:y:2002:i:1:p:59-77
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    References listed on IDEAS

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    3. Hall, Robert E, 1988. "The Relation between Price and Marginal Cost in U.S. Industry," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 921-947, October.
    4. Feltenstein, Andrew & Ha, Jiming, 1995. "The Role of Infrastructure in Mexican Economic Reform," The World Bank Economic Review, World Bank, vol. 9(2), pages 287-304, May.
    5. John Shea, 1997. "Instrument Relevance in Multivariate Linear Models: A Simple Measure," The Review of Economics and Statistics, MIT Press, vol. 79(2), pages 348-352, May.
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