1993 Reports

The Effects of Transportation Networks on Economic Growth

Canning, David; Fay, Marianne

We use panel data to estimate the marginal product of transport infrastructures for 96 countries. Using construction costs, we also calculate rates of return to road building. Our main finding is that transportation infrastructure appears to have "normal" rates of return in developed countries, extraordinarily high rates of return in industrializing countries, and moderate rates of return in underdeveloped countries. Our results also imply that the effect of infrastructure has little short run impact on output but leads to a higher growth rate and higher output in the long run.