The Growth and Distributive Impacts of Public Infrastructure Investments in the Philippines

Erwin Corong, Lawrence Dacuycuy, Rachel Reyes and Angelo Taningco

Working Papers MPIA from PEP-MPIA

Abstract: This study investigates the role of public infrastructure investment on economic growth and poverty reduction in the Philippines. Using a dynamic general equilibrium-microsimulation model that explicitly models public capital as a production input, we find that the positive supply side effects of higher public investment expenditure manifest over time, through higher capital accumulation and improved productivity. Our findings reveal that higher public infrastructure investment not only positively impacts real GDP, but also reduces poverty and inequality in the short and long run. In this context, the Philippine government needs to become more proactive in finding ways to finance higher public investment expenditures. This is especially relevant with respect to international financing, given the narrow tax base in the country. Our simulation results confirm that international financing is a better alternative than tax financing when considered in terms of its ability to improve the economy’s physical infrastructure in order to create job opportunities, improve productivity and complement its social protection measures.

Keywords: Computable general equilibrium; intertemporal choice and growth; public infrastructure investment; growth strategy; microsimulation; Philippines (search for similar items in EconPapers)
JEL-codes: D58 D90 E27 F35 F43 I32 O16 O53 (search for similar items in EconPapers)
Date: 2012
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https://portal.pep-net.org/documents/download/id/19928 (application/pdf)

Related works:
Chapter: The Growth and Distributive Impacts of Public Infrastructure Investments in the Philippines (2013)
Working Paper: The growth and distributive impacts of public infrastructure investments in the Philippines (2013)
Working Paper: The Growth and Distributive Impacts of Public Infrastructure Investments in the Philippines (2012)
Working Paper: The Growth and Distributive Impacts of Public Infrastructure Investments in the Philippines (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:lvl:mpiacr:2012-15

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