Infrastructure and economic growth: from new structural economics perspective

Shenzhe Jiang, Justin Yifu Lin and Ling Wang

China Economic Journal, 2025, vol. 18, issue 2, 209-224

Abstract: New Structural Economics emphasizes the critical role of infrastructure in supporting industrial upgrading and economic development. The theory highlights that the factor endowment structure endogenously determines the industrial structure with latent comparative advantage and the corresponding infrastructure structure that transform comparative advantage from latent to actual at a given time. To realize the industrial upgrading and economic development in an economy, it is essential to implement a stage-dependent infrastructure investment policy:(1) the scale of infrastructure investment should be higher in the early stages of development and gradually decrease as the economy develops; (2) infrastructure should be upgraded over time to align with changes in the factor endowment structure and industrial upgrading. Additionally, during economic crises, infrastructure construction tends to be more cost-effective, which can help address barriers to industrial upgrading and support long-term growth.

Date: 2025
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DOI: 10.1080/17538963.2025.2489876

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