The Effects of Infrastructure Development on Growth and Income Distribution
The authors provide an empirical evaluation of the impact of infrastructure development on economic growth and income distribution using a large panel data set encompassing over 100 countries and spanning the years 1960-2000. The empirical strategy...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, D.C.
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2004/09/5138675/effects-infrastructure-development-growth-income-distribution http://hdl.handle.net/10986/14136 |
| Summary: | The authors provide an empirical
evaluation of the impact of infrastructure development on
economic growth and income distribution using a large panel
data set encompassing over 100 countries and spanning the
years 1960-2000. The empirical strategy involves the
estimation of simple equations for GDP growth and
conventional inequality measures, augmented to include,
among the regressors, infrastructure quantity and quality
indicators, in addition to standard controls. To account for
the potential endogeneity of infrastructure (as well as that
of other regressors), the authors use a variety of
generalized-method-of-moments (GMM) estimators based on both
internal and external instruments and report results using
both disaggregated and synthetic measures of infrastructure
quantity and quality. The two robust results are: (1) growth
is positively affected by the stock of infrastructure
assets, and (2) income inequality declines with higher
infrastructure quantity and quality. A variety of
specification tests suggests that these results do capture
the causal impact of the exogenous component of
infrastructure quantity and quality on growth and
inequality. These two results combined suggest that
infrastructure development can be highly effective to combat
poverty. Furthermore, illustrative simulations for Latin
American countries suggest that these impacts are
economically quite significant, and highlight the growth
acceleration and inequality reduction that would result from
increased availability, and quality of infrastructure. |
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