Measuring Infrastructure in BEA's National Economic Accounts

Abstract

Infrastructure provides critical support for economic activity, and assessing its role requires reliable measures. This paper provides an overview of U.S. infrastructure data in the National Economic Accounts. After developing definitions of basic, social, and digital infrastructure, we assess trends in each of these categories and their components. Results are mixed depending on the category. Investment in some important types of basic infrastructure has barely or not kept up with depreciation and population growth in recent decades, while some other categories look better. We also show that the average age of most types of infrastructure in the U.S. has been rising, and the remaining service life has been falling. This paper also presents new prototype estimates of state-level investment in highways, highlighting the wide variation across states. In addition, we present new prototype data on maintenance expenditures for highways. In terms of future research, we believe that deprecation rates warrant additional attention given that current estimates are based on 40-year old research and are well below those used in Canada and other countries. We also believe that additional creative work on price indexes for infrastructure would be valuable. Finally, all of the data in this paper are downloadable, and we hope that the analysis in this paper and the availability of data will spur additional research. 'Basic' Infrastructure In Digital Infrastructure (e.g. communication-and cloud related) Social Infrastructure (e.g. schools and hospitals)

Towards Improved and Comparable Productivity Statistics

“…Furthermore, a sufficient asset breakdown is necessary for a robust and critical assessment of a country's infrastructure, which is an essential instrument for economic development. For example, Bennett et al (2020) exploited data in the national accounts of the United States to show that some important types of basic infrastructure have barely, or have not, kept pace with depreciation and population growth in recent decades. Many studies have built the analysis of infrastructure using GFCF data sourced from countries' national accounts, constructing measures of infrastructure investment using different GFCF sub-components, and therefore benefitting, when available, from GFCF data cross-classified by detailed asset type, and/or industry and institutional sector (Revoltella et al 2016; Asian Development Bank, 2017;Bennett et al 2020).…”

“…For example, Bennett et al (2020) exploited data in the national accounts of the United States to show that some important types of basic infrastructure have barely, or have not, kept pace with depreciation and population growth in recent decades. Many studies have built the analysis of infrastructure using GFCF data sourced from countries' national accounts, constructing measures of infrastructure investment using different GFCF sub-components, and therefore benefitting, when available, from GFCF data cross-classified by detailed asset type, and/or industry and institutional sector (Revoltella et al 2016; Asian Development Bank, 2017;Bennett et al 2020). As such, a lack of detail in GFCF sub-components by type of asset (such as residential and non-residential buildings, civil engineering works, and machinery and equipment) and the institutional sector/industry in which the asset is used makes it difficult to readily distinguish, and therefore evaluate, investments in infrastructure.…”

The Macroeconomic Impact of Infrastructure Investment: A Review of Channels

“…that they may disrupt existing ones and have adverse effects on the local economies. Finally, Bennett et al (2020), focusing on the US, highlight a general need for strengthening maintenance, given that investment in some important basic infrastructures, like transportation, has barely kept up with the depreciation of the last few decades.…”

Sensitivity of capital and MFP measurement to asset depreciation patterns and initial capital stock estimates

“…While such differences may be justified by country-specific factors such as climate, construction techniques (e.g. for buildings and structures) and government investment policies (OECD, 2009), they may also simply reflect differences in statistical assumptions as depreciation and retirement patterns tend to be based on thin empirical evidence or old research (Bennett et al, 2020).…”