World Bank Document

5. Some Issues Related to Infrastructure and Economic Growth or Inequality 
There are several issues related to the relationship between infrastructure and economic 
growth, as well as inequality. These include: how much the quality of infrastructure matters; is the 
marginal effect of infrastructure diminishing? What are the channels through which infrastructure 
affects economic growth and inequality (such as increased productivity of firms, employment, or 
labor market). Short-term vs. long-term impacts of infrastructure, infrastructure, and institutions, 
and so on. Each of these issues could be the topic of a separate paper and cannot be discussed in 
this paper. Below, we highlight a few of them. Some of these issues require further studies for 
better understanding and are highlighted in the next section.
5.1 Quality of Infrastructure
The existing literature on infrastructure and economic growth deals mostly with the 
quantity of infrastructure. Studies analyzing the impacts of infrastructure quality are limited due 
to the lack of time-series data representing the quality of infrastructure. A few studies, however, 
address this issue, although the findings are inconclusive. For example, Calderon and Serven 
(2010) find, using data from more than 100 countries, a positive relationship between infrastructure 

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quality and economic growth. On the other hand, Kodongo & Ojah (2016) do not find impacts of 
infrastructure quality on economic growth in Sub-Saharan Africa. Similar findings are also 
reported by Chakamera and Alagidede (2018) for the same region. It shows that although the 
combined effects of infrastructure stock and their quality are larger than the stock effects alone in 
countries with high infrastructure quality, the opposite was the case in countries with poorer 
infrastructure quality. Some studies use the CGE model to analyze the impacts of infrastructure 
quality on economic output (GDP). For example, using a CGE model of Nepal, Timilsina et al. 
(2018) find that electricity load shedding, which represents the poor quality of electricity supply, 
would have caused 7% GDP loss during the 2008-2016 period.