The role of public and private transport infrastructure capital in economic growth. Evidence from Pakistan

Irem Batool and Kathrin Goldmann

Research in Transportation Economics, 2021, vol. 88, issue C

Abstract: Within the context of large investments in the China-Pakistan Economic Corridor (CPEC) which is part of China's Belt and Road Initiative, the investigation of the effect of transport infrastructure investments on economic growth is highly relevant for Pakistan. We analyse this relationship applying vector error correction models, Granger Causality tests, and impulse response analyses. We employ multiple model specifications to study the impact of private vs. public capital as well as physical capital stocks vs. monetary capital stocks on economic growth. In models including private capital stocks, we find support for the production function relation as causality goes from infrastructure to GDP. In models that include public capital stocks, causality goes from GDP to transport investments, thus favouring Wagner's law. Therefore we conclude that focusing on a good legal environment for private investors seems to be a good option for promoting growth in Pakistan.

Keywords: Economic growth; Transport infrastructure; Cointegration; VAR-Models; Pakistan (search for similar items in EconPapers)
JEL-codes: O11 O47 R42 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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DOI: 10.1016/j.retrec.2020.100886

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