AbstractsEconomics

To what extent do expansions of infrastructure construct economic growth?

by My Hedlin




Institution: KTH Royal Institute of Technology
Department:
Year: 2014
Keywords: Infrastructure; Economic growth; VECM; Engineering and Technology; Teknik och teknologier
Record ID: 1351566
Full text PDF: http://urn.kb.se/resolve?urn=urn:nbn:se:kth:diva-147581


Abstract

This thesis shows that the relationship between economic growth and expansions of telephone main lines and electricity generating capacity is two-way, when looking at the period of 1955 - 1995 and half of the world's countries. In other words, expansions of these two kinds of infrastructure seem to both initiate and be induced by economic growth, highlighting the problem of much previous research that does not account for a bi-directional relationship. Furthermore, this research suggests that the effect that these two kinds of infrastructure have on economic growth was during this period great enough to be of policy interest, and it is likely that it can explain part of the vast differences seen between countries in GDP per capita today. While the impact that these two kinds of infrastructure had during this specific time will surely not be the same in the future, the results still point to a potentially important role for infrastructure expansions in determining economic growth, even though the kinds of infrastructure that have most impact will vary with time and technological progress.