Public Infrastructure and Structural Transformation
This study argues that public infrastructure is an important though previously neglected driving mechanism of the structural transformation process. To assess its significance quantitatively, this study first develops a multisector neoclassical gro...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2017
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/663871513692700637/Public-infrastructure-and-structural-transformation http://hdl.handle.net/10986/29076 |
| Summary: | This study argues that public
infrastructure is an important though previously neglected
driving mechanism of the structural transformation process.
To assess its significance quantitatively, this study first
develops a multisector neoclassical growth model with
heterogeneous firms, where public infrastructure contributes
to firms' production and mitigates the barriers to
firms' entry. The model is calibrated using data from
Brazil, a country that has significantly expanded its
infrastructure in recent decades, yet remains in deep need
of further infrastructure improvements. The accumulation of
infrastructure accelerates the structural transformation
through generating higher returns and lowering entry costs
in sectors with greater public capital intensity. In the
simulations, public capital formation explains about 15
percent of the process. The paper also shows the effects of
different barriers to public capital formation on the
structural transformation and GDP per capita. |
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