Public Infrastructure and Growth: New Channels and Policy Implications

46 Pages Posted: 16 Feb 2012

See all articles by Pierre-Richard Agénor

Pierre-Richard Agénor

University of Manchester - Centre for Growth and Business Cycle Research

Blanca Moreno-Dodson

World Bank

Date Written: March 30, 2006

Abstract

This paper provides an overview of the various channels through which public infrastructure may affect growth. In addition to the conventional productivity, complementarity, and crowding-out effects typically emphasized in the literature, the impact of infrastructure on investment adjustment costs, the durability of private capital, and the production of health and education services are also highlighted. Effects on health and education are well documented in a number of microeconomic studies, but macroeconomists have only recently begun to study their implications for growth. Links between health, infrastructure, and growth are illustrated in an endogenous growth model with transitional dynamics, and the optimal allocation of public expenditure is discussed. The conluding section draws implications of the analysis for the design of strategies aimed at promoting growth and reducing poverty.

Suggested Citation

Agénor, Pierre-Richard and Moreno-Dodson, Blanca, Public Infrastructure and Growth: New Channels and Policy Implications (March 30, 2006). Available at SSRN: https://ssrn.com/abstract=2005043 or http://dx.doi.org/10.2139/ssrn.2005043

Pierre-Richard Agénor (Contact Author)

University of Manchester - Centre for Growth and Business Cycle Research ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom

Blanca Moreno-Dodson

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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