Impacts of Transport Infrastructure on Productivity and Economic Growth: Recent Advances and Research Challenges

ABSTRACT

The paper provides an update of the survey focusing on estimating the contribution of transport infrastructure to productivity and economic growth. The central questions addressed are possible reasons behind the conflicting results reported in the literature on the elasticity of economic output with respect to transport infrastructure investment. After providing a systematic review of recent empirical studies on the effects of transport infrastructure on productivity and economic growth, the paper notes that controversial results can be attributed to ten causes (grouped into three categories for distinguishing): (1) related to different contexts: research period, geographical scales, and country's capability in enabling economic development; (2) related to different phenomena that are being measured: different economic sectors, different types of transport infrastructure, and different quality levels of transport infrastructure; and (3) related to distinct ways of measuring a similar phenomenon: measures used to describe the dependent variable and explanatory variable, functional specification, and estimation method of the econometric model. Strong network externalities of transport infrastructure may result in nonlinearity of the relationship between transport infrastructure and economic growth. Moreover, the absence of spatial concerns in infrastructure's impacts is another important source of inconclusive results. Finally, building on recent literature, the paper has discussed policy implications and identified several research avenues for further research.

Keywords:

• transport infrastructure
• productivity
• economic growth
• output elasticity

Acknowledgements

The author acknowledges the financial support provided by the National Natural Science Foundation of China (Project No. 41201102) and Leading Academic Discipline Program, 211 Project for Shanghai University of Finance and Economics (the 4th phase). The author wishes to thank Dr Moshe Givoni and four anonymous reviewers for their significant and constructive comments for improving the manuscript. Any mistakes and omissions in this paper remain my responsibility.