A Contribution of Transport Infrastructure to Economic Growth in Zambia-Cointegration and Causality Analysis.pdf

1、This Thesis analysis the effect and impact of transport infrastructure investments on economic growth in Zambia using time series data from 1970 to 2014. According to the World Bank (1994)，“public capital，and especially

2、infrastructure，is central to the activities of households and firms for this reason it represents the “wheels”- if not the engine–of economic activity. Even so,―infrastructure investment is not sufficient on its own to g

3、enerate sustained increases in economic growth concludes the World Bank (1994，p.19). In line with this notion，this Thesis deviates from the usual way of considering paved roads as variables to proxy transport infrastruc

4、ture as used in a sea of research in this field and rather estimates the effects of the total transport network classified as economically viable. Moreover，in consensus with the World Bank`s (1994，p.19-21) conclusion，the

5、 paper estimates a contribution of transport equipment proxied as Vehicle density per thousand persons to economic growth. An extended Cobb-Douglas production function approach is used in deriving the theoretical underpi

6、n of this analysis. Due to the stationarity nature and order of integration of the data i.e. integrated of order I(1) the estimation method employed is the Vector Error-Correction Model (VECM) a long Run Causal relations

7、hip is established in the context of the specified production function. Further，the Vector Autoregressive (VAR) estimation method is used to analyze the granger causality effects between economic growth and transport inf

8、rastructure and its complem ents. The VECM elasticity estimates casts incredulity on the VECM estimation methoD.Thus，to cross check the elasticity of each respective exogenous variable a Variable Elasticity of Substituti

9、on (VES) Translog production function is estimated using the logarithmic first difference. Transport infrastructure and vehicle density effects economic growth positively，while labor force and gross capital formation app

10、ear to negatively affect economic growth. To cast out this skepticism，the results obtained from the VECM are validated by using a Variable Elasticity of Substitution (VES) Translog production function and yielding same p

11、ositivity and negativity of the elasticities sing. However，further analysis of the marginal effects reveals that transport`s marginal effects are on a decline，while that of capital is on the rise. And transport granger c

12、auses Gross Domestic Product (GDP) growth，while vehicle fleet has a feedback system with economic growth. The results obtained from the marginal effects and impulse—response analysis should alert the government to r

13、econsider a strategy of the overall transport sector development，because if caution is not taken an extra amount invested in transport infrastructure will have an insignificant effect on economic growth due to mainly cro

14、wding—out effects. The instantaneous causality relationship between motor vehicle populations and economic growth should be maintained and promoted on the frontier of increasing the vehicle density and sustained by uncon