More Infrastructure, More Productivity?

For the IDB, investment in infrastructure is the most important priority when increasing the probability of improving productivity and reaching higher per capita income levels in the countries of the region.

Tuesday, April 16, 2019

The Inter-American Development Bank (IDB) published its report "Building Opportunities for Growth in a Challenging World," in which it addresses the benefits of infrastructure investment and its influence on productivity growth in the countries of the region.

According to the IDB study, labor productivity "... in agriculture, for example, would benefit from investments in all three infrastructure-related sectors: an estimated 1% increase in transport productivity increases productivity in agriculture by 1.2%; an estimated 1% increase in electricity, gas and water productivity increases productivity in agriculture by 0.5%.

In the case of manufactures, a high-growth sector worldwide, a 1 per cent increase in construction productivity is estimated to increase productivity by 0.42 per cent (the other infrastructure-related sectors do not seem to influence manufacturing productivity).

Adding up the results in all sectors, it is established that investments in the electricity, gas and water sector increase productivity in agriculture, mining and manufacturing. Investment in transport is particularly relevant to productivity growth in the agriculture and services sectors. And investments in construction are relevant to productivity growth in all economic sectors

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