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The role of public and private transport infrastructure capital in economic growth. Evidence from Pakistan

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  • Batool, Irem
  • Goldmann, Kathrin

Abstract

Within the context of large investments in the China-Pakistan Economic Corridor (CPEC) which is part of China's Belt and Road Initiative, the investigation of the effect of transport infrastructure investments on economic growth is highly relevant for Pakistan. We analyse this relationship applying vector error correction models, Granger Causality tests, and impulse response analyses. We employ multiple model specifications to study the impact of private vs. public capital as well as physical capital stocks vs. monetary capital stocks on economic growth. In models including private capital stocks, we find support for the production function relation as causality goes from infrastructure to GDP. In models that include public capital stocks, causality goes from GDP to transport investments, thus favouring Wagner's law. Therefore we conclude that focusing on a good legal environment for private investors seems to be a good option for promoting growth in Pakistan.

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  • Batool, Irem & Goldmann, Kathrin, 2021. "The role of public and private transport infrastructure capital in economic growth. Evidence from Pakistan," Research in Transportation Economics, Elsevier, vol. 88(C).
    • Handle: RePEc:eee:retrec:v:88:y:2021:i:c:s0739885920300846
    DOI: 10.1016/j.retrec.2020.100886
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    More about this item

    Keywords

    Economic growth; Transport infrastructure; Cointegration; VAR-Models; Pakistan;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

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