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The Impact of Public Infrastructure on the Productivity of the Chilean Economy
Author(s) -
AlbalaBertrand José M.,
Mamatzakis Emmanuel C.
Publication year - 2004
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/j.1467-9361.2004.00232.x
Subject(s) - productivity , economics , capital (architecture) , capital deepening , cost of capital , public infrastructure , production (economics) , monetary economics , capital intensity , labour economics , capital formation , financial capital , macroeconomics , human capital , microeconomics , market economy , profit (economics) , archaeology , political science , law , history
The aim of this study is to assess the effect of the change in infrastructure capital on the cost structure of the Chilean economy, and thereby on productivity, differentiating between two key institutional periods. A further aim is to establish the extent to which infrastructure capital formation affects private capital. The authors use an econometric estimation of the cost elasticity of infrastructure. Conclusions indicate that an increased infrastructure capital reduces the production cost of the economy, thereby increasing productivity, mostly in the second period. In turn, especially in this latter period, infrastructure capital formation appears to assert both a positive cost‐share effect on private capital and a negative cost‐share effect on labor. These effects can be explained to a large extent by the significant differences between the institutional structures of the two consecutive periods studied.