Toll Road Infrastructure Length and Productivity Growth: Evidence from the Java Island Goods-Producing Sector
11 Pages Posted: 25 Nov 2009
Date Written: November 24, 2009
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
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