The Effects of Infrastructure Development on Growth and income

By L. Serven, CÃ©sar Calderon. 2004

1,076 citations recorded by the source corpus.

This paper provides an empirical evaluation of the impact of infrastructure development on economic growth and income distribution using a large panel data set encompassing over 100 countries and spanning the years 1960-2000. The empirical strategy involves the estimation of simple equations for GDP growth and conventional inequality measures, augmented to include among the regressors infrastructure quantity and quality indicators in addition to standard controls. To account for the potential endogeneity of infrastructure (as well as that of other regressors) we use a variety of GMM estimators based on both internal and external instruments, and report results using both disaggregated and synthetic measures of infrastructure quantity and quality. The two robust results are: (i) growth is positively affected by the stock of infrastructure assets, and (b) income inequality declines with higher infrastructure quantity and quality. A variety of specification tests suggest that these results do capture the causal impact of the exogenous component of infrastructure quantity and quality on growth and inequality. These two results combined suggest that infrastructure development can be highly effective to combat poverty. Furthermore, illustrative simulations for Latin American countries suggest that these impacts are economically quite significant, and highlight the growth acceleration and inequality reduction that would result from increased availability and quality of infrastructure

Subfields: Economics and Econometrics, Political Science and International Relations

View Paper: https://www.semanticscholar.org/paper/57c6d1ae940f9d561058dd18158cee1fa2ada268

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Citations in the corpus

Public infrastructure and growth : new channels and policy implications (2006, neutral): “…stimulate growth.14 14Hulten (1996) argued forcefully for paying more attention to the quality of infrastructure capital in the growth process; and Calderón and Servén (2004) found a link (albeit weak) between indicators of infrastructure quality and the rate of economic growth in a cross-country…”
Economic growth in South Asia: Role of infrastructure (2012, background): “…cross-country studies on the impact of infrastructure on economic growth in developing countries which show a positive and significant relationship between them (Canning and Fay 1993; Easterly and Rebelo 1993; Roller and Waverman 2001; Calderón and Servén 2003, 2004; Canning and Pedroni 2004).”
Infrastructure and Economic Development in Sub-Saharan Africa (2008, background): “27 Such exercises are performed by Yepes, Pierce and Foster (2008) for Sub-Saharan Africa, Bogetic and Fedderke (2006) for South Africa, and Calderón and Servén (2004a) for Latin America.”
The United Nations World Water Development Report 2016: Water and Jobs (2016, background): “Infrastructure increases growth and decreases income inequality, while bringing water access into the analysis is particularly effective for reducing inequality (Calderon and Servén, 2004 and 2008).”
Moving to a New Global Competitiveness Index (2008, background): “42 Calderon and Serven 2004; Garcia-Milà et al. 1996; Gramlich 1994; Aschauer 1989.”
Taxation, corruption, and growth (2016, neutral): “Turning to welfare, we use expression (19).”
Government quality and the economic returns of transport infrastructure investment in European regions (2015, neutral): “Some studies have addressed endogeneity using time-lags as instruments with generalized methods of moments (GMM) estimation techniques (Calderón and Servén, 2004; Crescenzi and Rodrı́guez-Pose, 2012), whereas others have employed instruments based on historical factors correlated with the…”
Resources, Policies, and Agricultural Productivity in Sub-Saharan Africa (2013, methodology): “Roads are probably the most critical element of infrastructure for agricultural growth in developing countries (Calderón and Servén, 2004). Rural roads reduce travel times, transportation costs, and in-transit spoilage; raise prices farmers receive for their products; and lower prices they pay for i”
Transport Infrastructure, Spatial Clusters and Regional Economic Growth in China (2012, background): “The main findings from these studies concern the output elasticity of infrastructure capital (Munnell, 1992; World Bank, 1994; Holtz-Eakin and Schwartz, 1995; Calderon and Serven, 2003; Canning and Bennathan, 2007; Crafts, 2009; Sahoo and Dash, 2009), and most of them find a positive output elastici”
Growth slowdowns and the middle-income trap (2013, methodology): “We study three kinds of infrastructure development that have been viewed as important by the literature, using data taken from Calderon and Serven (2004). Telephone Lines is the log of telephone lines per 1000 people.”