Infrastructure and productivity in Brazil

Caio Cesar Mussolini () and Vladimir Teles ()

Brazilian Journal of Political Economy, 2010, vol. 30, issue 4, 645-662

Abstract: This article analyses the relationship between infrastructure and total factor productivity (TFP) in Brazil during the second half of the twenty century. Public capital is used as a proxy for infrastructure capital. The hypothesis to be tested is that an increase in infrastructure — more than than a rise in the private capital stock— has a positive effect on productivity on the long run. In that sense, it was used the Johansen methodology for testing the cointegration between TFP and the public/private capital ratio. In fact, it was found that this complementary relation (public-private) helps in explanning TFP’s path from 1950 to 2000. The results were robust to different measures of productivity and the public/private ratio. In addition, the short (medium) run analysis has indicated that shocks in this ratio have a significant effect over the TFP, but the opposite is not true. Therefore, the cuts in infrastructure investment could be a possible explanation for the TFP’s fall during the 70’s and 80’s. JEL Classification: O11; O47; O54.

Keywords: infrastructure; economic growth; total factor productivity; cointegration (search for similar items in EconPapers)
Date: 2010
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