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Effects of Public Infrastructure on Cost Structure and Productivity in the Private Sector
Author(s) -
Paul Satya
Publication year - 2003
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.2003.00144.x
Subject(s) - productivity , public sector , private sector , public infrastructure , sample (material) , public capital , business , economics , capital (architecture) , public economics , labour economics , economy , economic growth , chemistry , archaeology , chromatography , public investment , political science , law , history , public fund
This paper examines the effects of public infrastructure on the cost structure and productivity in the private sector in Australia. Translog cost functions incorporating public capital infrastructure are estimated for the aggregate private sector as well as for seven broad industry groups using annual time series data for 1968/69–1995/96. The effects of public infrastructure on productivity are measured in terms of both cost‐saving and output‐augmenting measures. The empirical results suggest that public infrastructure has a positive and significant impact on productivity in private sector industries. Public capital serves as a substitute for both private capital and labour. The rates of return to public capital are significant and vary over the sample period.