Infrastructure and growth in South Africa: direct and indirect productivity impacts of 19 infrastructure measures

Johannes Fedderke, Zeljko Bogetic () and Zeljko

No 3989, Policy Research Working Paper Series from The World Bank

Abstract: Empirical explorations of the growth and productivity impacts of infrastructure have been characterized by ambiguous (countervailing signs) results with little robustness. A number of explanations of the contradictory findings have been proposed. These range from the crowd-out of private by public sector investment, non-linearities generating the possibility of infrastructure overprovision, simultaneity between infrastructure provision and growth, and the possibility of multiple (hence indirect) channels of influence between infrastructure and productivity improvements. The authors explore these possibilities using panel data for South Africa over the 1970-2000 period, and a range of 19 infrastructure measures. Using a number of alternative measures of productivity, the prevalence of ambiguous (countervailing signs) results, with little systematic pattern is also shown to hold for their data set in estimations that include the infrastructure measures in simple growth frameworks.The authors demonstrate that controlling for potential endogeneity of infrastructure in estimation robustly eliminates virtually all evidence of ambiguous impacts of infrastructure, due for example to possible overinvestment in infrastructure. Controlling for the possibility of endogeneity in the infrastructure measures renders the impact of infrastructure capital not only positive, but of economically meaningful magnitudes. These findings are invariant between the direct impact of infrastructure on labor productivity, and the indirect impact of infrastructure on total factor productivity.

Keywords: Transport Economics Policy&Planning; Economic Theory&Research; Public Sector Economics&Finance; Economic Growth; Inequality (search for similar items in EconPapers)
Date: 2006-08-01
New Economics Papers: this item is included in nep-afr, nep-dev, nep-eff and nep-ure
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Citations: View citations in EconPapers (18)

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Journal Article: Infrastructure and Growth in South Africa: Direct and Indirect Productivity Impacts of 19 Infrastructure Measures (2009)
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