INFRASTRUCTURE AND strongPRIVATE-SECTORstrong PRODUCTIVITY.pdf

Economic Studies No. 17,Autumn 1991 INFRASTRUCTURE AND PRIVATE-SECTOR PRODUCTIVITY Robert Ford and Pierre Poret CONTENTS Introductionand summary 64 I . The model 65 II. The data 67 Ill. The results 72 IV. Conclusions 73 Annex: Data sources 76 Bibliography 89 Robert Ford is a PrincipalAdministrator in Country Studies 111 Division. Pierre Poret was an Administrator in the Resource Allocation Division of the Economicsand Statistics Departmentwhen this article was prepared, and is now a Principal Administrator in the Capital Movements, International Investment and Services Division in the Directorate for Financial, Fiscal and Enterprise Affairs. The authors are grateful to Andrew Dean, Steve Englander, John P. Martinand Peter Sturm for commentsthat improved both the substance and the presentation of the paper, but reserve the responsibility for all remaining errors. They are also grateful to Laurence Le Fouler for research assistance. The opinions expressed in this paper are those of the authors and do not necessarily represent the views of the OECD or its Member governments. 63 INTRODUCTIONAND SUMMARY The idea that investment in infrastructure may influence productivity has natural appeal: one need only imagine an economy with trucks but no roads, or ships without ports. In an attempt to pin down such a relationship more precisely, Aschauer (1989) assumed an aggregate Cobb-Douglas technology in which output is produced by the usual private-sector capital and labour inputs, plus public-sector