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Infrastructure-Economic-Growth-and-Poverty-A-Review
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DP G ro wt h Ra te Hulten and Schwab (1991) US Regions 1970 to 1986 First Derivative; Levels OLS Value added-MFP growth Link between public infrastructure and economic performance is weak. Estimates are -0.1795 and -0.344 respectively Implausible coefficients for labor and private capital as well as for public capital due to first differencing; First differencing destroys long-term relationship in the data; Production function Gross Q-MFP growth 18 estimate is inadequate; Measurement error Sturm and De Haan (1995) US National 1949 to 1985 Cobb- Douglas; OLS Applying first-differencing method to Aschuer (1989a), estimated output elasticity is 0.26* for the US and 1.15** for the Netherland. Endogeneity; Reverse causality; Measurement error Netherland National 1960 to 1990 Log Difference Level Holtz-Eakin and Schwartz (1995) US States 1971 to 1986 Cobb- Douglas; Log Difference Level OLS There is little support for claims of a dramatic productivity boost from increased infrastructure outlays. The estimated upper bound for the output elasticity is 0.10 Relying on assumptions; Aligned with the weaknesses of growth model Nourzad and Vrieze (1995) 7 OECD Countries 1963 to 1988 Log Difference levels GLS There is a statistically significant positive relationship between public capital formation and the growth rate of labor productivity. Estimated output elasticity is 0.059*** Endogeneity; Reverse causality; Measurement error Morrison and Schwartz (1996b) US States 1970 to 1987 Generalized Leontief Cost Function; First derivative; Log Levels SUR Infrastructure investment provides a significant return to manufacturing firms and augments productivity growth Reverse causality; Common trends; External validity Morrison and Schwartz (1996a) New England (Manufacturi ng Industry) 1971 to 1987 In the short run, public capital expenditures provide cost-saving benefits that exceed the associated investment costs due to substitutability between public capital and private inputs. Over time, however, stimulating investment in private capital increases economic performance more effectively than public capital expenditures alone. Present value return of one-dollar investment in public capital is 1.108 to 2.638 Wang (2002) East Asian Countries 1979 to 1998 First Derivative; Levels GLS Spillover effects between private and public sectors coexist in analyzing the interrelation between public infrastructure and private production. Elasticity of the public infrastructure is 0.24*** Endogeneity; Reverse causality; Measurement error # The dependent output variable is followed by the output to public capital stock/ investment elasticity value, where p<0.01 is denoted by ***; p<0.05 is denoted by **; and p<0.1 is denoted by * |
