Abstract
This research is an attempt to examine the impact of infrastructure development on income generation in the north eastern region of Bangladesh which enjoyed a wide range of amenities after the construction of Jamuna Bridge in 1998. The application of 'difference in difference estimator' using the pooled household level income data of the treatment and control area in the pre and post time period of the project is the methodology of this research. The 4 districts situated nearer to the project location at the North eastern region of Bangladesh have been regarded as treatment area while the 4 districts of the Barisal division, the southern part of the country have been treated as control area. The household data of 1995 and 2005 have been used in this research. Regression models using dummy variables, interaction terms and some control variables-land, household size and age exhibit that the infrastructure impact on income of the project area ranges from 7.7-10% with statistical significance in the 1995-2005. The positive and decreasing rate of impact of control variables on income going in tune with the postulation of positive and diminishing marginal productivity of capital and labor in the production function has made the regression estimations more realistic and spontaneous.
Highlights
Infrastructure development which is critical for the economic development of any country provides the easier and quicker access of the poor people to the market mechanism
The estimation results of model 1 captures the most important effect of interaction factors, PI*Yr on income which amounts to 0.077 indicating that 7.7% increase in income of the households of the treatment area over the period 1995-2005 is attributed to the infrastructure development project and this increase is statistically significant at 1% level
This research ensures the contribution of physical infrastructure for acceleration of income generation which has been manifested in the catchments of Jamuna Multipurpose Bridge project through the regression analysis
Summary
Infrastructure development which is critical for the economic development of any country provides the easier and quicker access of the poor people to the market mechanism. Studies show that infrastructure investments complemented by policy and institutional reforms enable markets to develop and function efficiently, thereby mainstreaming the poor. Infrastructure development contributes both directly and indirectly, to poverty reduction having access to more income generating activities[1]. Since the infrastructure investment has been done mainly by the government and in some cases under governmentprivate sector collaboration, this sort of investment can be broadly termed as public capital investment. This public capital investment encompasses the investment in highways, water, sewerage system, bridge construction and other forms of public capital. Public capital investment is used to play a significant role in the market mechanism in various ways which encourage the poor people to participate actively in the income generating activities
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