Non-linear Effects of Investment in Road Infrastructure on the Structural Competitiveness of the Economy: The Case of Burkina Faso

Sigue Moussa

doi:10.11648/j.ijefm.20200803.12

Abstract

This article assesses the non-linear effects of investment in road infrastructure on the structural competitiveness of the economy of Burkina Faso. After selecting a period from 1980 to 2015, we estimated two econometric models. These are the quadratic estimation and that of the spline. The results obtained revealed a non-linearity between the structural competitiveness of the economy and investment in road infrastructure. Indeed, the quadratic estimation made it possible to identify a non-linearity in the shape of an inverted U with an optimal threshold of 10.11%. Regarding the spline estimation, it provided an optimal interval of [5%; 15%]. In this interval, a 1% increase in investment in road infrastructure improves structural competitiveness by 0.018%. However, beyond 15%, a 1% increase in investment in road infrastructure leads to a decrease in structural competitiveness by 0.013%. In view of these results, the implication of economic policy that emerges is that in order to benefit from optimal structural competitiveness, the share of investment in road infrastructure in the total investment budget must be between 5% and 15%.

Highlights

Since Smith, the costs of transport infrastructure in general and road infrastructure in particular are considered like a factor in promoting economic growth [1]
These coefficients show that 84.52% and 83.32% of the variations in structural competitiveness are explained by the variables selected
The results of the estimations show that the investment in road infrastructures admits a significant impact on the structural competitiveness of the economy of Burkina Faso for the two selected approaches

Summary

Introduction

Since Smith, the costs of transport infrastructure in general and road infrastructure in particular are considered like a factor in promoting economic growth [1] This is a result of developments in endogen growth theory. Works of Aschauer until that of Barro and Kopp, investment in road infrastructure is apprehended as factor in improving the productive capacity and the overall productivity of the economy [2,3,4,5]. As such, it contributes to creating and building long-term global economy added value. It is on this basis that the new models of endogenous growth consider expenditure on road infrastructure as a factor self-sustained gain in productivity and long-term growth [4]

Objectives

Results

Discussion

Conclusion