Road infrastructure development and economic growth

Abstract

Stimulating economic growth and development of road infrastructure in economical lagging regions is the goal of many countries. This is because road infrastructure plays a crucial role by providing mobility for the efficient movements of people and goods, as well as providing accessibility to a wide variety of commercial and social activities. However, to achieve a sustainable economic growth, focusing on road infrastructure development alone would not be sufficient. Thus, this study analyse the contribution of road infrastructure development and other socio-economic factors that contributed to economic growth. To shed light on this issue, fixed-effects panel linear regression analysis was conducted using time-series cross-sectional data for 60 countries over the period of 3 decades from 1980 to 2010. The key finding of this study demonstrated that the growth in road length per thousand population, per capita export, per capita education expenditure and physical capital stock per worker contributed positively to economic growth. It was observed that there is an inverted U-shaped dependency relationship between urbanization and economic growth. That is, the economic growth increases at low urbanization levels but decreases once urbanization exceeds a threshold level. Moreover, it was also observed that the growth in road length per thousand population would facilitate export growth. In summary, this study suggest that policies focused on road infrastructure development should be implemented hand-in hand with other socio-economic and urban growth policies, in order to realize a sustainable economic growth.