A pseudo – panel approach to estimating dynamic effects of road infrastructure on firm performance in a developing country context

Abstract

To overcome the absence of true firm-level data, we provide evidence that the use of pseudopanels based on aggregated data can correctly identify production function parameters. We construct a pseudo-panel of Colombian manufacturing firms for the years of 2000 to 2009 to study the effects of transportation infrastructure on firm performance in a developing country and find elasticities of output with respect to road infrastructure ranging from 0.13 to 0.15 per cent. This confirms that roads are important for private output growth and, as our results are larger than those reported in the literature for developed countries, that transportation infrastructure is relatively more important for the economy of developing countries. We also identify a one-year time lag with which firms' outputs react to road stock changes. This could be indicative of firms requiring time to adjust their production to road changes. We furthermore identify that the effect of road infrastructure is particularly large for heavy manufacturing industries. Moreover, we investigate the regional heterogeneity of the role of transportation infrastructure for firms' output growth. Our results are robust to different econometric concerns. We additionally provide Monte Carlo simulations to support the validity of pseudo-panels in the context of firm-level data.

Dinámica transicional de la relación producción-inversión en el sector transporte de los estados mexicanos

“…En la India, por ejemplo, se asocia más con la teoría del crecimiento endógeno y la ley de Wagner (Maparu y Mazumber, 2017). Mientras que para Barzin et al (2018) hay efectos heterogéneos en función de si se trata de un país desarrollado o en desarrollo; también parece haber impactos diferenciados en el ámbito de estudio de las regiones de un país (Fingleton y Szumilo, 2019). Por su parte, Kyriacou et al (2019) analizan la eficiencia administrativa de 34 países y descubren que es posible materializar objetivos de crecimiento aceptables sin que sean necesarios niveles elevados de inversión en infraestructura; igualmente, se pueden alcanzar los mayores impactos económicos en función de un cierto nivel de inversión, resultado útil dadas las restricciones presupuestarias que a menudo afrontan los países para invertir y que es crucial investigar, principalmente en países donde los recursos para el desarrollo económico tienen más limitaciones (Timilsina et al, 2020).…”

“…Para Barzin et al (2018) los impactos en la infraestructura de caminos son más importantes en países en desarrollo que en los desarrollados; además, en lugares como Gran Bretaña, los efectos son regionalmente heterogéneos (Fingleton y Szumilo, 2019), lo que da una idea de que la distancia económica en relación con el estado estacionario es un factor que contribuye a la diferenciación de resultados.…”

Economic Effects of Transportation Infrastructure Quantity and Quality: A Study of German Counties

“…Furthermore, effects differ between countries, time, industries, and modes of transport, explaining the wide range of estimates found in individual studies. Recent analyses accounting for the identified shortfalls fall into a more narrow range of estimates while providing evidence for many parts of the world: Besides others, Barzin, D'Costa, & Graham (2018) identify the impact of Colombian roads, L. Liu & Zhang (2018) study the high speed rail construction in China, and Arbués, Baños, & Mayor (2015) in Spain as well as Börjesson, Isacsson, Andersson, & Anderstig (2019) in Sweden focus on European countries. All authors find positive effects on production output and employment, as do several studies for the German case: The reports by Bertenrath, Thöne, & Walther (2006) and Barabas et al (2010) provide extensive background information as well as estimation results that are close to the findings of the mentioned meta-analyses.…”

Conceptualization of an urban travel behavior model to mitigate air pollution for sustainable environmental development in Malaysia

“…While road agencies or authorities are maintaining road lane or road infrastructure, the travel behavior performance of drivers will be affected due to the diversion of routes (Hartmann and Ling, 2016). Furthermore, good road infrastructure will lead to the reduction of air pollution (Van Acker et al, 2016), the increase of firms' output through efficient transport systems (Barzin et al, 2018) and increase of cycling activities (Hull and O'Holleran, 2014) among least physically active commuters (Panter et al, 2016). Reinvestment in cycling infrastructure, pedestrianization of town centers and public transport are considered as an encouragement for a change of mode of travel from the workplace or home (Van Acker et al, 2016) that will reduce carbon dioxide from vehicle emissions (Banister, 2008).…”