Revisited the Relationship Between Economic Growth and Transport Infrastructure in India: An Empirical Study

Prabir Kumar Ghosh and Soumyananda Dinda ()

MPRA Paper from University Library of Munich, Germany

Abstract: This study empirically re-examines the relationship between transport infrastructure and economic growth in India for the period 1990–2017. Multivariate dynamic models are applied to estimate the relationship between economic growth and different modes of transport infrastructure namely road, rail and air transports in the vector error correction model framework. The results reveal that road and air transports have significant positive contribution to economic growth in the long-run while rail transport is insignificant. This study further examines the said issue using unit free index variables and has constructed a composite index of transport infrastructure using principal component analysis to analyze the nexus between aggregate transport infrastructure and economic growth in India in the post globalization era. The results of the study indicate the bidirectional causality between aggregate transport infrastructure and economic growth. Results of this study suggest incorporating feedback issue in policy formulations.

Keywords: Multivariate model; Composite Index; Transport Infrastructure; Globalization; VECM; PCA; Causality. (search for similar items in EconPapers)
JEL-codes: C1 C5 O1 O5 R4 (search for similar items in EconPapers)
Date: 2019-08, Revised 2021-02
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Published in Indian Economic Journal 1.70(2022): pp. 34-52

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