Impact of infrastructure investment on developed and developing economies

Abstract

This paper uses two longitudinal datasets—one with more limited coverage from the organization for economic co-operation and development and another constructed using general government gross fixed capital formation—to test for the relative effects of infrastructure versus non-infrastructure investment on output per worker, between developed and developing economies. The paper presents evidence that increasing infrastructure per worker has a larger relative impact on developing economies. This also implies that the share of gross capital formation devoted to infrastructure should be higher in developing economies.