Nonlinearity between Infrastructure Inequality and Growth

Abstract

Infrastructure, through its direct and indirect effects, has a bearing on growth, equity and overall development of a country. Widening inequality has significant implications for growth and macroeconomic stability leading to suboptimal use of human resources and concentration of decision-making in the hands of a few. This article discusses the relationship between growth and infrastructure inequality in India since the 1990s. Tracing three dimensions of infrastructure inequality over time, this study tests the existence of its nonlinear relationship with growth. Empirical estimates reject the inverted U-shaped and U-shaped patterns between disparity in infrastructure and economic growth. Accelerated decline in infrastructure inequality is depicted with growth in India across infrastructure sectors of transport, energy and communication. Policymakers need to sustain efforts to eradicate infrastructure disparity by following a growth-oriented approach.

The Impact of Social Infrastructure and Physical Infrastructure on Economic Growth in Punjab, India

“…The relative weights assigned to infrastructure variables have been determined by using principal component analysis (PCA). Several studies employed PCA to formulate the composite indices (see, for example, Gayithri, 1997; Ghosh and De, 1998; Mohanty and Bhanumurthy, 2019; Nauriyal and Sahoo, 2010; Ouattara and Zhang, 2019; Sahoo and Dash, 2009; Simon and Natarajan, 2017). PCA transforms an original set of observations of correlated variables into a few linearly uncorrelated factors by applying an orthogonal transformation (Malhotra and Dash, 2018; Simon and Natarajan, 2017).…”

“…Several studies employed PCA to formulate the composite indices (see, for example, Gayithri, 1997; Ghosh and De, 1998; Mohanty and Bhanumurthy, 2019; Nauriyal and Sahoo, 2010; Ouattara and Zhang, 2019; Sahoo and Dash, 2009; Simon and Natarajan, 2017). PCA transforms an original set of observations of correlated variables into a few linearly uncorrelated factors by applying an orthogonal transformation (Malhotra and Dash, 2018; Simon and Natarajan, 2017). The core philosophy behind PCA is to account for the highest variance possible in the set of original variables in terms of as few components as possible (Ram, 1982).…”

“…Srivastava and Mujoo (2017) revealed that economic infrastructure contributes positively and significantly towards economic development of India, while the coefficient of SI turned out to be negative and insignificant in this regard. Simon and Natarajan (2017) unearthed the relationship between infrastructure inequality and economic growth across 17 major states of India between 1990India between -1991India between and 2010India between -2011 The study revealed that declining infrastructural disparities are significantly associated with accelerated economic growth in India.…”

“…Infrastructural bottlenecks are asserted as impediments to the inclusive growth strategy of the government and have become a buzz word and ubiquitous theme in the public policy discourses of India (Bajar and Rajeev, 2015). The remarkable role played by infrastructure to expedite the process of economic growth is widely acknowledged in the literature (Aschauer, 1989; Baldwin and Dixon, 2008; Claderon and Serven, 2004; Ismail and Mahyideen, 2015; Ouattara and Zhang, 2019; Simon and Natarajan, 2017; World Bank, 1994). Infrastructure development is necessary to promote economic growth as it reduces transaction and input costs, provides new avenues of employment, creates new markets, equips the economy with highly skilled and healthier human resources, improves productivity and stimulates economic activities (Mohanty and Bhanumurthy, 2019).…”

Social justice and planning policy: the provision of sewerage infrastructure in Jakarta, Indonesia

“…One of the areas that is prominently associated with inequality is the provision of urban infrastructure, and this is particularly the case in the Global South. In general, the discussion of these two issues is related to the issue Several studies (Lopez Garcia, 2017;Makmuri, 2017;Simon & Natarajan, 2017) have cited the linkages between unequal distribution of infrastructure and services and spatial inequality.…”