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Economic growth in South Asia: Role of infrastructure

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  • Pravakar Sahoo
  • Ranjan Kumar Dash

Abstract

We examine the output elasticity of infrastructure for four South Asian countries viz., India, Pakistan, Bangladesh, and Sri Lanka using panel cointegration techniques for the period 1980--2005. In this context, we develop an index of infrastructure stocks and investigate the impact of infrastructure on output. The study finds a long-run equilibrium relationship between output and infrastructure along with other relevant variables, such as gross domestic capital formation (GDCF), labor force, international trade and human capital. The results reveal that GDCF, labor force, export and expenditure on human capital exhibit a positive contribution to output. More importantly, infrastructure development contributes significantly to output growth in South Asia. Further, the panel causality analysis shows that there is mutual feedback between total output and infrastructure development.

Suggested Citation

  • Pravakar Sahoo & Ranjan Kumar Dash, 2012. "Economic growth in South Asia: Role of infrastructure," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 21(2), pages 217-252, January.
    • Handle: RePEc:taf:jitecd:v:21:y:2012:i:2:p:217-252
    DOI: 10.1080/09638191003596994
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    1. Dumitrescu, Elena-Ivona & Hurlin, Christophe, 2012. "Testing for Granger non-causality in heterogeneous panels," Economic Modelling, Elsevier, vol. 29(4), pages 1450-1460.
    2. Peter Pedroni & David Canning, 2004. "The Effect of Infrastructure on Long Run Economic Growth," Department of Economics Working Papers 2004-04, Department of Economics, Williams College.
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