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Chapter 5: Endogenous Growth Theories: Agglomeration Benefits and Transportation Costs
5 Endogenous growth theories: agglomeration beneﬁts and transportation costs G. Alfredo Minerva and Gianmarco I.P. Ottaviano1 5.1 Introduction The role of infrastructure in global and local economic development can hardly be overstated (World Bank, 1994). In particular, as reported by Calderon and Serven (2004), its role has been stressed along two main dimensions: its eﬀects on economic growth and its eﬀects on income inequality. Along the ﬁrst dimension, most studies focus on the impact of infrastructure on aggregate output, ﬁnding it positive. This is highlighted in a seminal contribution by Aschauer (1989), who ﬁnds that the stock of public infrastructure capital is a signiﬁcant driver of aggregate total factor productivity (TFP). Even though subsequent eﬀorts question Aschauer’s quantitative assessment, overall his qualitative insight survives more sophisticated econometric scrutiny (see, for example, Gramlich, 1994; Röller and Waverman, 2001). In particular, Calderon and Serven (2003) identify positive and signiﬁcant impacts on output of three types of infrastructure (telecommunications, transport and energy) and show that such impacts are signiﬁcantly higher than those of non-infrastructure capital. The link between infrastructure and long-run growth is much less explored. Easterly and Rebelo (1993) ﬁnd that public expenditure in transport and communications fosters growth. This result is conﬁrmed by Sanchez-Robles (1998) in the case of physical infrastructure and by Easterly (2001) as well as Loayza et al. (2003) in the case of communications (telephone density). On the other hand, it is argued that sometimes the ineﬃciency of...
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