Infrastructure and Growth

Abstract

While a high rate of economic growth does not necessarily reduce inequality or poverty, there seems to be a consensus among researchers and policy makers that continuous, rapid economic growth is required for poverty alleviation. Governments around the world are continually looking for new strategies to increase the ability of their economies to produce goods and services. In this light, over the last two decades, economists have developed more sophisticated models to evaluate the potential economic impacts of different supply-side policies that aim to raise the productive capacity of the economy. Specifically, alongside modelling the main factors of production – physical capital and labour – these models seek to account for the concurrent use of non-traditional inputs, such as public infrastructure and education, as key contributing factors to economic growth.