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Infrastructure Shortage: A Gap Approach

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  • Jose Miguel Albala-Bertrand

    (Queen Mary and Westfield College, University of London)

Abstract

We propose a method to estimate both whether there is an overall infrastructure shortage and the optimal share of infrastructure in gross fixed capital formation (GFCF). This is based on a two-gap model and linear programming, and is illustrated with the case of Mexico (1950-1985). The results show that Mexico appears to have started with an appropriate share of core infrastructures in GFCF. Then, there would have been an infrastructure shortage up until 1964, and an infrastructure surplus there after. It also shows that the optimal coefficient of infrastructure investment-to-optimal output would have been around 4.5 per cent, and that each unit of infrastructure would have optimally supported over three units of GFCF. A macroeconomic shortage do es not however mean that there would be a shortage everywhere, but it does imply that the economy as a whole would be in a net state of shortage. So our method may at least provide an appropriate context within which more focused analysis may be attempted.

Suggested Citation

  • Jose Miguel Albala-Bertrand, 1999. "Infrastructure Shortage: A Gap Approach," Working Papers 404, Queen Mary University of London, School of Economics and Finance.
    • Handle: RePEc:qmw:qmwecw:404
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    File URL: https://www.qmul.ac.uk/sef/media/econ/research/workingpapers/1999/items/wp404.pdf
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    References listed on IDEAS

    as
    1. Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-1196, September.
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    8. Hollis B. Chenery, 1953. "The Application of Investment Criteria," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 67(1), pages 76-96.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Infrastructure shortage; Two-gap model; Linear programming; Mexico;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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