Infrastructural Investments and Economic Growth: Evidence from Pakistan
Abstract
Purpose: The goal of this study is to make an attempt to find out the relationships between infrastructural investments and economic growth.
Design/Methodology/Approach: The study employs time series data over the years from 1972 to 2020. To observe the long-run and short-run impact of infrastructural investments on economic growth, an ARDL modeling approach to co- integration is used that is most suitable technique over some other techniques of integration after inspecting the stationary level of data via ADF test.
Findings: The findings of the study indicate that Investments on Railways, Roads, Gas Projects, Telecommunication, Water Projects and Power Projects appear as efficient factors for enhancing economic growth of Pakistan in the long run.
Implications/Originality/Value: It is suggested that government should increase the public and private investment for development of Railways, Roads, Telecommunication and Water projects in Pakistan.
Downloads
Article Analytics Summary
References
Achour, H., and Belloumi, M. (2016). Investigating the causal relationship between transportinfrastructure, transport energy consumption and economic growth in Tunisia. Renewable and Sustainable Energy Reviews, 56, 988-998. DOI: https://doi.org/10.1016/j.rser.2015.12.023
Albala-Bertrand, J. M., & Mamatzakis, E. C. (2001). Is public infrastructure productive? Evidence from Chile. Applied Economics Letters, 8(3), 195-198. DOI: https://doi.org/10.1080/13504850150504595
Aschauer, D. A. (1989). Public investment and productivity growth in the Group of Seven. Economic Perspectives, 13(5), 17-25.
Banerjee, A., Dolado, J., and Mestre, R. (1998). Error‐correction mechanism tests for cointegration in a single‐equation framework. Journal of Time Series Analysis, 19(3), 267-283. DOI: https://doi.org/10.1111/1467-9892.00091
Baum-Snow, N., Freedman, M., and Pavan, R. (2018). Why has urban inequality increased? American Economic Journal: Applied Economics, 10(4), 1-42. DOI: https://doi.org/10.1257/app.20160510
Boccanfso. D, Estache. A, and Savard. L. (2009). A macro–micro analysis of the effects of electricity reform in Senegal on poverty and distribution. J Dev Stud, 45(2009). 351–68. DOI: https://doi.org/10.1080/00220380802582361
Bond, P. (1999). Basic infrastructure for socio-economic development, environmental protection and geographical desegregation: South Africa's Unmet Challenge. Geo Forum, 30(1), 43-59. DOI: https://doi.org/10.1016/S0016-7185(98)00031-1
Calderon, C. A., and Servén, L. (2004). The effects of infrastructure development on growth and income distribution. Available at SSRN 625277. DOI: https://doi.org/10.1596/1813-9450-3400
Cook, P. (2011). Infrastructure, rural electrification and development. Energy for Sustainable Development, 15 (2011), 304–313. DOI: https://doi.org/10.1016/j.esd.2011.07.008
Coşar, A. K., and Demir, B. (2016). Domestic road infrastructure and international trade: Evidence from Turkey. Journal of Development Economics, 118, 232-244. DOI: https://doi.org/10.1016/j.jdeveco.2015.10.001
Davidson, O., & Mwakasonda, S. A. (2004). Electricity access for the poor: a study of South Africa and Zimbabwe. Energy for Sustainable Development, 8(4), 26-40. DOI: https://doi.org/10.1016/S0973-0826(08)60511-6
Ehizuelen, M. M. O. (2017). More African countries on the route: the positive and negative impacts of the Belt and Road Initiative. Transnational Corporations Review, 9(4), 341-359. DOI: https://doi.org/10.1080/19186444.2017.1401260
Estache, A. (2006, February). Africa’s infrastructure: Challenges and opportunities. In high level seminar: Realizing the Potential for Profitable Investment in Africa, Tunis, Tunisia.
Fedderke, J. W., Perkins, P., and Luiz, J. M. (2006). Infrastructural investment in long-run economic growth: South Africa 1875–2001. World Development, 34(6), 1037-1059. DOI: https://doi.org/10.1016/j.worlddev.2005.11.004
Hiremath, R. B., Kumar, B., Balachandra, P., Ravindranath, N. H., and Raghunandan, B. N. (2009). Decentralised renewable energy: Scope, relevance and applications in the Indian context. Energy for Sustainable Development, 13(1), 4-10. DOI: https://doi.org/10.1016/j.esd.2008.12.001
Hjort, J., and Poulsen, J. (2019). The arrival of fast Internet and employment in Africa. The American Economic Review, 109(3), 1032–1079. DOI: https://doi.org/10.1257/aer.20161385
Howells. M, Alfstad. T, Victor. D, Goldstein. G, and Remme. U. (2005). A model of household energy services in a low-income rural African village. Energy Policy, 33(2005).1833–51. DOI: https://doi.org/10.1016/j.enpol.2004.02.019
Ivus, O., and Boland, M. (2015). The employment and wage impact of broadband deployment in Canada. Canadian Journal of Economics, 48(5), 1803-1830. DOI: https://doi.org/10.1111/caje.12180
Louw, E., Leijten, M., and Meijers, E. (2013). Changes subsequent to infrastructure investments: Forecasts, expectations and ex-post situation. Transport Policy, 29, 107-117. DOI: https://doi.org/10.1016/j.tranpol.2013.04.012
Mayer, T., and Trevien, C. (2017). The impact of urban public transportation evidence from the Paris region. Journal of Urban Economics, 102, 1-21. DOI: https://doi.org/10.1016/j.jue.2017.07.003
Mishra, S., Tewari, I., and Toosi, S. (2020). Economic complexity and the globalization of services. Structural Change and Economic Dynamics, 53, 267-280. DOI: https://doi.org/10.1016/j.strueco.2020.03.002
Ndzendze, B., and Monyae, D. (2019). China’s belt and road initiative: linkages with the African Union’s Agenda 2063 in historical perspective. Transnational Corporations Review, 11(1), 38-49. DOI: https://doi.org/10.1080/19186444.2019.1578160
Owusu, S., Szirmai, A., and Foster-McGregor, N. (2020). The rise of the service sector in the global economy. UNU-MERIT Working Paper Series #2020-056.
Pesaran, M. H., Shin, Y., and Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289-326. DOI: https://doi.org/10.1002/jae.616
Roller, L. H., and Waverman, L. (2001). Telecommunications infrastructure and economic development: A simultaneous approach. American Economic Review, 91(4), 909-923. DOI: https://doi.org/10.1257/aer.91.4.909
Romer, P. M. (1987). Growth based on increasing returns due to specialization. The American Economic Review, 77(2), 56-62.
Sahoo, P., and Dash, R. K. (2009). Infrastructure development and economic growth in India. Journal of the Asia Pacific Economy, 14(4), 351-365. DOI: https://doi.org/10.1080/13547860903169340
Saidi, S., Shahbaz, M., and Akhtar, P. (2018). The long-run relationships between transport energy consumption, transport infrastructure, and economic growth in MENA countries. Transportation Research Part A: Policy and Practice, 111, 78-95. DOI: https://doi.org/10.1016/j.tra.2018.03.013
Szirmai, A., and Verspagen, B. (2015). Manufacturing and economic growth in developing countries, 1950–2005. Structural Change and Economic Dynamics, 34, 46-59. DOI: https://doi.org/10.1016/j.strueco.2015.06.002
Zahra. K, Azim. P, and Mahmood.A. (2008). Telecommunication Infrastructure Development and Economic Growth: A Panel Data Approach. The Pakistan Development Review, 47, 711-726. DOI: https://doi.org/10.30541/v47i4IIpp.711-726
Copyright (c) 2021 Muhammad Ayub, Rabia Rasheed, Rashid Ahmad, Furrukh Bashir
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
CSRC Publishing and JBSEE adhere to Creative Commons Attribution-Non Commercial 4.0 International License. The authors submitting and publishing in JBSEE agree to the copyright policy under creative common license 4.0 (Attribution-Non Commercial 4.0 International). Under this license, the authors published in JBSEE retain the copyright including publishing rights of their scholarly work and agree to let others remix, tweak, and build upon their work non-commercially. All other authors using the content of SBSEE are required to cite author(s) and publisher in their work. CSRC Publishing and JBSEE follow an Open Access Policy for copyright and licensing.
