Infrastructure Economic Growth Research Articles

Econometric Analysis of Taxation, Capital Formation and Economic Growth in Nigeria

The study examined the link between Taxation, Capital Formation and their implication for Economic Growth in Nigeria. The study objective is against the background of the need to mobilize revenue to shore up the much-needed capital stock and infrastructure for economic growth. It employed descriptive statistics, Unit Root and ARDL to estimate the short and long-run correlation among the variables selected for the study. Findings arising from the study indicate a significant and negative relationship between inflation, taxation and economic growth in Nigeria. Similarly, there is a positive and significant correlation between broad money and Real Gross Domestic Product which implies that taxation and inflation negatively impact economic growth in Nigeria. Policy recommendation based on the findings includes the following: Government should ensure an efficient tax collection process and encourage investment in the Private Sector by reducing the tax burden on them.

The role of transport infrastructure in economic growth: Empirical evidence in the UK

Since 2015, the United Kingdom (UK) has increased its investment in transportation infrastructure to compensate for years of underinvestment in comparison with peer countries. It is of critical importance to evaluate the effect of these recent investments, as well as historical ones, on economic development, both theoretically and empirically, to provide guidance on future infrastructure investment. However, few research looks into such policy adjustment on economic growth in the UK. To fill this gap, this paper investigates the relationship between transport infrastructure development and economic growth in the UK from different time spans. Principal component analysis (PCA) is used to construct a comprehensive measure of transport infrastructure development. This paper then applies Vector Error Correction Model (VECM) to investigate both long-run and short-run relationships between transport infrastructure development and economic growth from 1970 to 2017 in the UK. Empirical results suggest that transportation infrastructure has a long-run promotive effect on economic development. However, in the short run, this effect turns out to be significantly negative. The analysis of this paper indicates differentiated roles that the UK's transport infrastructure played in economic growth, which should be considered in future policy design of achieving economic sustainability in the UK.

The role of infrastructure in economic growth and income inequality in Indonesia

The role of infrastructure in economic growth and income inequality in Indonesia

Remittances, the Diffusion of Information and Industrialisation in Africa

This study examines the role of information and communication technology (ICT) on remittances for industrialisation in a panel of 49 African countries for the period 1980-2014. The empirical evidence is based on three simultaneity-robust estimation techniques, namely: (i) Instrumental Fixed Effects (FE) in order to control for the unobserved heterogeneity; (ii) Generalised Method of Moments (GMM) to account for persistence in industrialisation; and (iii) Instrumental Quantile Regressions (QR) to control for initial levels of industrialisation. Our best estimators are from FE and QR estimations because the GMM regression outputs largely fail post-estimation diagnostic tests. The following findings are established: (i) There are positive marginal effects from the interaction between remittances and ICT in the FE regressions whereas there are negative marginal impacts from the interaction between remittances and ICT; (ii) Interactions between remittances and mobile phone penetration are positive in the bottom and 90th quantiles whereas the interaction between internet penetration and remittances is positive in the bottom and top quantiles of the industrialisation distribution. Overall, the role of ICT in remittances for industrialisation is much more apparent when existing levels of industrialisation are accounted for. The findings contribute to the debates on the importance of external flows and information infrastructure in economic growth as well as the relevance of remittances in driving economic development in environments where institutions are weak. The value of the study to scholars and policy makers also builds on the fact that the potential for ICT and remittances in Africa can be leveraged to address development challenges on the continent such as the low level of industrialisation.

PENGARUH PEMBANGUNAN INFRASTRUKTUR DASAR TERHADAP PERTUMBUHAN EKONOMI DI INDONESIA

This study aimed to analyzed the effect of the construction of basic infrastructure for economic growth in 26 provinces by using secondary data from 2004 – 2009. The model used is multiple linear regression using Panel Data with Fixed Effect Analysis Method. The results of this study show variable electricity and roads in a positive and significant effect on economic growth in the region in 26 provincial in Indonesia. The provincial government is expected to prioritize the allocation of funds for the improvement of access to basic infrastructure (roads, electricity, telephone, and water), especially in remote areas, so as to boost economic growth in each province in Indonesia. Keywords: economicgrowth, basic infrastructur, data pael, FEM

Koodankulam Nuclear Power Project (KKNPP) Vs. Public – A Case of Poor Public Relations

Power is the very basic infrastructure for economic growth. Nuclear power is one of the several energy sources and it forms an important part in our energy mix. But, intellectuals, social activists and public are skeptical about the safety of the nuclear reactors. The recent Fukushima disaster has caused loud hue and cry around the world and many demand that reactor orders must be scrapped or abandoned. In fact, thick clouds have been gathering against nuclear power reactors.

Investing in Ontario's Infrastructure for Economic Growth and Prosperity

This paper documents the potential employment and other value-added benefits of infrastructure investments in Ontario. In particular, it details the impact of infrastructure investment as a counter-cyclical fiscal policy tool. A review of the recent literature reveals that infrastructure investment serves both as a tool for job creation and as a stimulus for the economy as a whole. During recessionary times infrastructure investments have been able to boost the economy and have served as a primary job creation tool, especially when the private sector investments have dried up. At the same time, these investments have produced the infrastructure necessary to support future economic growth. Published research also revealed that the input-output models have been the preferred tool to capture the relationship between infrastructure investments and their impact on economy. Thus, the primary aim of this paper is to illustrate the impact of infrastructure investment on job creation, GDP, and tax revenue in the Province of Ontario using an input-output model. The paper documents the results of a simulation exercise, using an input-output model of the Ontario economy based on a 2008 industry structure that estimated the economic impact of a $12-billion public sector (government) investment in non-residential building and engineering construction in Ontario. This infrastructure investment is estimated to have a $38.4-billion impact on the province’s economy. The $12-billion investment would create an estimated 203,000 jobs (person-years of employment) in the provincial economy, generate an estimated $10 billion in employment income and increase the provincial GDP by an estimated $18.5 billion. This investment would also generate an estimated $668.7 million in corporate taxes and $161.2 in personal income taxes. When the impacts are normalized to a $1-billion stimulus, the IO simulations revealed that during the 2008 recessionary period in Ontario, every billion dollar invested in non-residential building and engineering construction would create almost 17,000 new jobs. Of those, the model estimated 3,050 jobs in direct impact, 2,850 jobs in indirect impact, and 11,000 jobs in induced impact. These benefits are in addition to the longer term direct benefits of infrastructure investments that would result from the use of new or rehabilitated infrastructure. For instance, a $12-billion investment in transportation infrastructure could result in a significant improvement in accessibility and mobility in the region, and related improvements in labour and business productivity. The above-mentioned monetized impacts of infrastructure investments, however, are above and beyond the positive impacts on accessibility and productivity. Finally, the paper reviews transportation infrastructure plans for the Greater Toronto and Hamilton Area (GTHA) and discusses the investment tools identified recently by various agencies. The paper concludes that public-private partnerships for infrastructure development will promote greater use of private capital in the construction and development of public infrastructure. User fees and those taxes that are likely to modify consumer behaviour are recommended as the preferred tools for revenue generation to support the construction of new infrastructure. We recommend that sufficient funds should be made available for infrastructure development and renewal in Canada to maintain the competitiveness of Canadian businesses. The opportunity cost of not spending now reduces the productive capacity of the economy in the future, especially when public capital investments in infrastructure have the potential to generate immediate and substantial productivity gains.

Public Infrastructure and Economic Growth in Pakistan: A Dynamic CGE-Microsimulation Analysis

The role of infrastructure in economic growth and welfare has been studied extensively across the literature over the past three decades. We use a dynamic CGE model linked to a microsimulation model to estimate the macro-micro impact of public infrastructure investment. Two approaches to public investment are considered in our simulations. In the first, production taxes finance the additional public infrastructure investment and in the second, foreign borrowing provides resources. Our results reveal that public infrastructure investments have the same direction of impact whether funded by taxation or international borrowing, particularly when looking at macroeconomic gains and poverty reduction in the long run. However, in the very short run, tax financing puts a strain on output in the industrial sector and thus reduces economic growth in the short run. The financing from international borrowing has a Dutch disease-like impact in the short run, as indicated by a decline in exports.

Infrastructure, Economic Growth and Poverty Reduction in Africa

The relationship between infrastructure, economic growth and poverty reduction in Africa is relatively unexplored in the literature. This paper covers this lacuna. It appraises the role of infrastructure in economic growth and poverty alleviation in Africa. The relevance of infrastructure to growth and poverty is empirically robust in the macroeconomic and micro-economic literature as well as in the rapidly evolving randomized field evaluations studies. Despite the perceived role of efficient infrastructure as a critical element for economic growth, poverty reduction and the attainment of the Millennium Development Goals (MDGs), there is abundant evidence that Africa’s infrastructure is still much below international standards in terms of quantity and quality. In addition to overt neglect of the sector by African governments since attaining independence, there has been a policy mistake founded on the dogma of the 1980s/90s that infrastructure would be financed by the private sector. This has not materialized and the results have been rather disappointing, especially in water and transport, two extremely important sectors. Access, affordability and quality of service continue to be key issues in all infrastructure sectors. Poverty was also not carefully addressed as part of the regulatory and other reform packages implemented during the 1990s. Not surprisingly, the infrastructure needs of the poor the majority of who reside in rural and periurban areas has not been met. They continue to rely on unsafe, unreliable and often overpriced alternatives to compensate for the policy failures. There is now a significant base of experience during much of the last 25 years from which useful lessons have been learned. Unlike the reforms of the 1990s which were shaped by ideological cleavages and blame game, a lot of pragmatism is currently being exhibited by key actors and policy makers in the sector. There is gradually a coalescing of opinions on the reform agenda in the 21st century. The choice is no longer between a segregation of public and private provision but mutual collaboration between both actors. The public sector is now expected to play a much more important role in financing infrastructure than previously acknowledged, while the private sector should assist in meeting the significant needs associated with infrastructure construction, operation, and, to some extent, financing in sectors such as telecommunications, energy generation, and transport services in which commercial and political risks are much lower. Small-scale operators, who have played a generally underestimated role in catering to the needs of the populations not met by the higher visibility actors, must also be brought on board.

Infrastructure, Economic Growth and Poverty Reduction in Africa

The relationship between infrastructure, growth and poverty is empirically robust in the macro- economic and microeconomic literature as well as in the rapidly evolving randomised field evaluation studies. This article appraises the role of infrastructure in economic growth and poverty alleviation in Africa. It notes that Africa’s infrastructure is still much below international standards in terms of quantity and quality. Access, affordability and quality of service continue to be key issues in all infrastructure sectors. Poverty was also not carefully addressed as part of the regulatory and other reform packages implemented during the 1990s. Not surprisingly, the infrastructure needs of the poor, the majority of who reside in rural and peri-urban areas have not been met and they continue to rely on unsafe, unreliable and often overpriced alternatives to compensate for the policy failures. Unlike the reforms of the 1990s which were shaped by ideological cleavages and blame game, there is gradually a coalescing of opinions on the reform agenda in the twenty-first century. The choice is no longer between a segregation of public and private provision but mutual collaboration between both actors. The public sector is now expected to play a much more important role in financing infrastructure than previously acknow-ledged, while the private sector should assist in meeting the significant needs associated with infrastructure construction, operation, and to some extent, financing in sectors such as telecommunications, energy generation, and transport services in which commercial and political risks are much lower. JEL Classification: F3, L3, L9, N17, 055

Economic growth in India: the role of physical and social infrastructure

We investigate the role of physical and social infrastructure in economic growth in India after controlling for other important variables such as investment, labour force, and trade, using the Two‐Stage Least Squares (TSLS) and Dynamic Ordinary Least Squares (DOLS) techniques, for the period 1970 to 2006. In this context we develop a composite index of physical infrastructure stocks and examine its impact on output. We find that physical and social infrastructures have a significant positive impact on output apart from gross domestic capital formation and international trade. Further, the causality analysis supports the results, revealing unidirectional causality from infrastructure development and human capital to output growth in India.

Infrastructure development and economic growth in India

In this study, we investigate the role of infrastructure in economic growth in India for the period 1970–2006 on the basis of the empirical framework developed by D.A. Aschauer (Is public expenditure productive? Journal of monetary economics, 23 (2), 1989, 177–200). In this context, we develop an index of infrastructure stocks and estimate growth-accounting equations to investigate the impact of infrastructure development on output. Overall, the results reveal that infrastructure stocks, labour force and total investment play an important role in economic growth in India. More importantly, we find that infrastructure development in India has a significant positive contribution toward growth than both private and public investments. Further, causality analysis shows that there is unidirectional causality from infrastructure development to output growth. From a policy perspective, there should be greater emphasis on infrastructure development to sustain the high economic growth which the Indian economy has been experiencing for the last few years.

Infrastructure and regional growth, growth dynamics and policy relevance for India

The role of infrastructure in economic growth has been the subject of considerable research in the fields of public policy, economics, and planning. In this paper, I examine the contribution of publicly supplied infrastructure to sub national regional growth in India. I first develop and numerically examine a regionally disaggregated model of economic growth to understand the dynamics of private capital and public infrastructure. For the empirical analysis, I use a pooled data set for Indian states to examine if publicly supplied infrastructure is a significant determinant of regional growth and whether there are spatial variations in the productivity effects of infrastructure. The main findings are that transport and communications infrastructure expenditures are significant determinants of regional growth, and the positive benefits accruing from these expenditures come not only from investments made by individual states, but there are positive externalities from network expenditures made by neighboring states. Finally, the out of sample simulated regional growth predictions show divergence in private capital formation between lagging and leading states.

Role of Infrastructure in Economic Growth and Poverty Reduction

Role of Infrastructure in Economic Growth and Poverty Reduction

Output Effects of Transport Infrastructure: The Netherlands, 1853–1913

In this paper we put to trial the alleged role of investment in transport and communications infrastructure in economic growth in the Netherlands in the second half of the nineteenth century. To do so, we combine a new data set with data‐oriented econometric techniques. Testing of the main hypothesis by applying Granger's concept of causation in a vector auto‐regression model reveals that the development of infrastructure ‘caused’ Dutch economic growth. In order to investigate the underlying mechanisms, we enhance the basic model with impulse‐response analysis. This leads to a clear response pattern of GDP to a change in transport infrastructure investment. The response of GDP is explained as being induced by three underlying mechanisms:1. Positive forward linkage effects (mainly through reductions in the costs of transport and communications).2. Positive backward linkage effects (mainly through expenditure and income effects).3. Negative transitional dynamics (mainly through changes in the spatial setting of the economy).