Both the asean economic community blueprint and the master plan on asean connectivity, adopted by asean leaders in 2007. Pdf infrastructure development and economic growth in china. Infrastructure leading southeast asias economic recovery. Following this line of argument, infrastructure policies might play a role in explaining east asia s relative growth success if east asia is more effective than other regions in relieving. We examine the output elasticity of infrastructure for four south asian countries viz. The impact of infrastructure on trade and economic growth. Singapore is home to an established ecosystem of public sector agencies and private sector firms that include developers, engineering, procurement and construction companies, professional services firms, financial institutions, and multilateral development banks. Asian economies considered to have the greatest unmet needs are. The need for soft infrastructure development in central asia. Infrastructure and economic growth in asia electronic. In that context, the financing of infrastructure has been a critical element of most economic growth and poverty reduction strategies in developing countries since the start of this millennium. Although most economies in asia have already developed their basic infrastructure, the focus of development is usually on the quantity rather than the quality. Pdf in this study, we investigate the role of infrastructure in economic growth in india for the period 19702006 on the basis of the empirical.
Infrastructure is basically the base in which economic growth is built upon. But neither human wellbeing nor of economic growth is possible only through the provision of economic infrastructure as well as social infrastructure. This book provides a comparative analysis of the aggregate and sectoral implications of higher spending on infrastructure in three very different asian. Executive summary an assessment of recent economic growth economic growth in india, pakistan and bangladesh, the three largest economies of south asia, jumped from an average of 5 percent in the 1990s to well above that in 20002008. The role of infrastructure in promoting economic growth in iran. Infrastructure development in east asia stronger economic.
The data show that the per capita stock of road infrastructure in highincome economies is dramatically greater than in middle and lowincome economies. Apr 18, 2015 infrastructure is vital to economic development, as it is key to achieving higher and stable economic growth. Second, the bidirectional causality is revealed among. Asia, india, china, economic growth, comparison introduction during the last 30 years there has been a seismic shift in the global economy. Southeast asia is at a crossroads, and has difficult but clear choices to make. Roads, water systems, mass transportation, airports and utilities are all examples of infrastructure.
Pdf public spending on infrastructure plays an important role in promoting economic growth and poverty alleviation. Pdf infrastructure and economic growth in asia researchgate. Compared to the forecasts made in december 2019, these lower forecasts give an indication of the extent of the repercussions from the. Pdf development of infrastructure and economic growth of. While some of the existing infrastructure in the region is world class, most of it is below average. The provision of adequate infrastructure, along with macroeconomic stability and a longterm development strategy, is one of the necessary conditions for sustainable economic and social development. Infrastructure and growth in developing asia stephane straub and akiko teradahagiwara november 2010 stephane straub is professor at the toulouse school of economics, arqade. Infrastructure and economic growth in asia springerlink. Real gdp growth in southeast asia, china and india annual percentage change. Getting the right financing mix for infrastructure projects would be rewarding for borrowers and lenders and, more importantly, provide a boost to gdp growth for the region in the medium term.
Section d discusses the financing needs of the region to close the infrastructure gap and the different options available. Output of infrastructure sectors such as power, water, transport, etc. It is difficult to imagine a modern world without these facilities. Infrastructure and economic growth in the middle east and.
While many governments in asia have emphasized lack of public infrastructure as a determinant of regional disparity and a key element constraining economic development kessides, 1993kessides. In this chapter, targeted increases in investment in trade and transport infrastructure for those. The need for soft infrastructure development in central. Title infrastructure development and economic growth in. Moreover, economic growth can be stimulated by making an investment in the major determinants of economic growth i. Linkage between infrastructure, economic growth and poverty reduction in east asia. Empirical studies mainly use cobbdouglas production function in the neoclassical growth model, and incorporate infrastructure as an input. The experience from china suggests that it is necessary to design an economic policy that improves the physical infrastructure as well as human capital formation for sustainable economic growth in. Efficient infrastructure can promote sustainable economic and social development. Infrastructure is argued to be one of the critical factors for economic growth in the low income countries like bangladesh.
However, in the exogenous growth version, the driving force behind growth is technical progress, and long run infrastructure levels simply follow income levels. Pdf infrastructure and economic growth in east asia. Furthermore, the two new econometric techniques, driscoll and kraay estimation, and structural equation model are applied. Infrastructure investment is crucial for creating a positive legacy of economic growth that is more resilient.
Physical infrastructure, gdp growth, infrastructure index, public policy introduction the relationship between infrastructure and economic growth has been one of the burning issue for researchers as well as for policy makers. The institute conducts basic and comprehensive studies on economic and related affairs in all developing countries and regions, including asia, the. To this end, the study highlighted the inadequacies of existing infrastructure facilities in countries of the escap region and also estimated their. A rapidly growing literature starting with the seminal. The discussions at the conferences focused on three themes. In the endogenous growth model, on the other hand, there is the possibility that shocks to infrastructure investment have permanent effects on the level of income. Post world war ii reconstruction presented a model where. Asian economies have rapidly improved their economic. Pdf 1mb cited by this paper examines whether infrastructure investment has contributed to east asia s economic growth using both a growth accounting framework and crosscountry regressions.
Asia infrastructure financing economic cycle,growth trends. It covers those supporting services that help the growth of directly productive activities like agriculture and industry. Empirical studies unequivocally show that underinvestment in infrastructure limits economic growth. This has undoubtedly supported the relatively strong economic growth performance of the country, as well as contributed to the progress in social and economic wellbeing of its citizens. In addition to physical infrastructure, ict is vital to trade and economic growth. Except for the five relatively advanced economies hong kong. Infrastructure asia supports asia s social and economic growth through infrastructure development. Infrastructure for supporting inclusive growth and poverty. Infrastructure, value chains, and economic upgrades. Rising from poverty, backwardness, and a morass of failed policies, china and indiathe two most populous nations on the planethave rapidly. Oct, 2020 the role of infrastructure in economic growth and welfare has been studied extensively across the literature over the past three decades. The adequate infrastructure in the form of road and railway transport system, ports, power, airports and their efficient working is also needed for integration of the indian economy with other economies of the world.
However, the causal mechanisms behind this are contested. Key points economic impact of covid19 outbreak on asean. Assessing the impact of infrastructure on economic growth. In a developing economy with chronic undersupply of infrastructure, transitory growth could conceivably last for decades. At the heart of this is the belief that infrastructure is critical for economic development, and that developing economies would need to invest significantly to address infrastructure needs, reduce infrastructure gap, in order to develop their economies. Thus, enhancing our infrastructure linkages is a cornerstone in the building of the asean community. Infrastructure development has a strong multiplier effect in terms of boosting economic activity and creating jobs. According to studies infrastructure is indispensable to achieve economic growth and the role of infrastructure has received increased attention. It is then a natural question to ask whether the infrastructure development has boosted the economic growth of south asian countries, or high economic growth in. Infrastructure development as key to economic growth and. The first one shows the linkages between infrastructure and economic growth at the economy.
Infrastructure stock is thus generally compared to gdp and infrastructure. The impact of infrastructure on trade and economic growth in. Fostering growth through digitalisation economic outlook for. Health and education along with support infrastructure such as shelter, sanitation, power, telephony, and road connectivity that can give economic growth a. Infrastructure and growth in developing asia asian development. Empirical studies unequivocally show that underinvestment in infrastructure limits econ. The former literature finds the relationship between public expenditure and factors that drive economic growth, especially productivity improvement. It is because the role of infrastructure is important for sustained growth in the long run. Hagiwaras study 2010 showed the growth rate of these infrastructure stocks promotes economic growth in most countries in east asia and south asia. Transport infrastructure investments are seen to be a driver for economic growth by promoting access to economic markets. Infrastructure investment and economic growth, journal of economic perspectives, american economic association, vol.
Transport infrastructure and economic growth in china. The first one shows the linkages between infrastructure and economic growth at the economy wide, regional and sectoral level. The region has enjoyed strong economic growth, but as elsewhere in the world this growth model. Economic outlook for southeast asia, china and india 2018 fostering growth through digitalisation the economic outlook for southeast asia, china and india is a biannual publication on regional economic growth, development and regional integration in emerging asia. Impact of infrastructure investment on developed and. Public spending on infrastructure plays an important role in promoting economic growth and poverty alleviation. The results showed that infrastructure development plays a key role to sustain to accelerate the process of economic growth and sustain it in the longrun. In that context, the financing of infrastructure has been a critical element of most economic growth and poverty reduction strategies in developing countries, since the start of this millennium. For countries to ensure sustainable growth, infrastructure development in areas such as water, energy, transportation and waste must be constructed and operated with a sustainable outlook. Pdf infrastructure development and economic growth. And megacities in both emerging and developed marketsreflecting shifting economic and demographic trendswill create enormous need for new infrastructure. Connectivity has become a defining feature of the modern economy and one of the significant.
India, pakistan, bangladesh and sri lanka using pedronis panel. Economic studies in inequality, social exclusion and wellbeing. Akiko teradahagiwara is economist in the macroeconomics and finance research division, economics and research department, asian development bank. Jun 01, 2020 the study aims to investigate the impact of infrastructure on the economic growth of south asia. Asia inland and remote areas, landlocked countries, and distant islandsare isolated economically as well as geographically. Pdf infrastructure and economic growth in asia john. These are vital to the household life as well as to the economic activity. Meeting asias infrastructure needs asian development bank.
Pdf on mar 30, 2021, siti munawaroh and others published development of infrastructure and economic growth of papua province find, read and cite all the research you need on researchgate. The south asian association for regional cooperation saarc. Economic growth and structural change in south asia. Infrastructure as a catalyst for regional integration, growth. Also, it is important to know how much other variables that seem to influence growth work through infrastructure. Nov 25, 2019 the encouragement of private sector competition in central asia is an important mechanism to facilitate economic growth and competitiveness in the global marketplace. In 2009, the asian development bank adb and the adb institute projected infrastructure needs for developing asia from 2010 to 2020 in infrastructure for a seamless asia seamless asia. Economic outlook for southeast asia, china and india 2019. Infrastructure for a seamless asia asian development bank. Introduction over the last five decades, infrastructure in egypt has experienced a remarkable improvement. Relationship between infrastructure and economic growth. Transport, telecommunications, energy, water, health, housing, and educational facilities have become part and parcel of human existence.
Introduction infrastructure and growth approach china pakistan philippines summary and conclusion public spending on infrastructure plays an important role in promoting economic growth and poverty alleviation. Infrastructure is the prerequisite for the development of any economy. Pdf infrastructure development and economic growth in india. This paper examines whether infrastructure investment has contributed to east asias economic growth using both a growth accounting framework and cross. Infrastructure development and economic growth in south. Infrastructure and growth and poverty in bangladesh. The positive impact of infrastructure on economic growth and inclusive social development has been well documented by researchers in several social science disciplines. Infrastructure enhances trade, export, foreign direct investment, and economic growth.
World bank data infrastructure spending growth % gdp growth % philippines vietnam thailand malaysia indonesia singapore 14% 12% 10% 8% 6% 4% 2% 0% 12. The first, the forward linkage, between infrastructure and economic growth, derives from the following factors. Investment and government spending are likely to offset substantial weakness in trade. On the other hand, the latter directly literature relates the stock of physical infrastructure economic growth. But, one wonders to what extent exogenous shifts in infrastructure growth can contribute to concurrent economic performance. Policymakers in developing east asia see infrastructure investment as an essential determinant of growth. Impact of infrastructure on economic growth in south asia. The study covered 32 of adbs 45 developing member countries dmcs and four sectors.
By promoting international trade, many countries in east asia are now. At the same time, numerous other studies have shown that investment in infrastructure. Infrastructure, economic growth and trade in saarc. Transport infrastructure development and economic growth. The rise of the southeast asian tigers business sweden. The infrastructure is important for faster economic growth and alleviation of poverty in the country. Empirical studies unequivocally show that underinvestment in infrastructure limit economic growth. Efforts to reduce intraregional trade transaction costs have contributed significantly to economic growth and poverty alleviation in asia. This means that the final impact it has on economic output is greater than the initial injection of spending. Current car economic growth models are based on the extraction and production of natural resources and yield mixed results, with high levels of state involvement and income.
Infrastructure spending and gdp growth average growth rates from 20122016 source. Impact of physical infrastructure on economic growth. Executive summary an assessment of recent economic growth economic growth in india, pakistan and bangladesh, the three largest economies of south asia, jumped from an average of 5. There are two main set of issues that the survey covers. Transport infrastructure and economic growth in china abhijit banerjee, esther du. Asian infrastructure investment bank aiib, its management, its board of directors, or its members. For most of the variables used, both the growth accounting exercise and crosscountry regressions fail to find a significant link between infrastructure. In the endogenous growth model, on the other hand, there is the possibility that shocks to infrastructure investment.
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