Toll Road Infrastructure Length and Productivity Growth: Evidence from the Java Island Goods-Producing Sector

11 Pages Posted: 25 Nov 2009

See all articles by Lukas B. Sihombing

Lukas B. Sihombing

University of Indonesia (UI) - Faculty of Economic, University of Indonesia (UI) - Department of Civil Engineering

Date Written: November 24, 2009

Abstract

This paper investigates the role of toll road length in Java Island goods production. Province-wide production function (DKI Jakarta, West Java, Center Java, DI Jogjakarta, East Java and Banten) using Cobb-Douglas and translog functional forms with toll road length, construction capital and labor as the three inputs are estimated. Production functions are estimated using standard techniques to control for unobserved province and time specific characteristics based on pooled cross-section data for 6 Java Island provinces over the period 2002-2009. The issues of nonstationarity data is recognized and appropriate adjustment is made. Output elastitisities of toll road length has a positive contribution on provincial goods-producing output. This relationship holds for various specifications of the error structure and functional forms. Toll road length and construction capital are found to be substitutes. Toll road length and labor are found to be complements. The size and significance of the estimates very depending on specifications of the error structure and on the use of functional forms.

Keywords: Cobb-Douglas and translog functional, pooled cross-section data, toll road

JEL Classification: B22, C21, C22, F43, H54

Suggested Citation

Sihombing, Lukas B., Toll Road Infrastructure Length and Productivity Growth: Evidence from the Java Island Goods-Producing Sector (November 24, 2009). Available at SSRN: https://ssrn.com/abstract=1512407 or http://dx.doi.org/10.2139/ssrn.1512407

Lukas B. Sihombing (Contact Author)

University of Indonesia (UI) - Faculty of Economic, University of Indonesia (UI) - Department of Civil Engineering ( email )

Kampus Baru
Depok, West Java 16424
Indonesia

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