The Nexus between Infrastructure Investment and Economic Growth in the Mexican Urban Areas

Vicente German-Soto¹, Héctor A. Barajas Bustillos²

¹Facultad de Economía, Universidad Autónoma de Coahuila, Saltillo, México.
²Instituto de Ciencias Sociales y Administración, Universidad Autónoma de Ciudad Juárez, Ciudad Juárez, México.

DOI: 10.4236/me.2014.513112                

Abstract

The relationship between infrastructure investment and economic growth is explored for the main urban areas of Mexico during the period 1985-2008. The methodology consists of a production function estimated by means of panel data techniques that include distributed effects in time. The findings highlight that the economic impact from infrastructure investment is effectively spread through time and cannot only be contemporaneous. This result suggests long-run effects. Moreover, the empirical estimates are according to the urban areas’ economic performance: Where major infrastructure provision exists, higher rates of growth are also taking place. Conclusions highlight that if infrastructure provision is not enough it could be a restriction for growth.

Keywords

Infrastructure Investment, Economic Growth, Urban Economics

Conflicts of Interest

The authors declare no conflicts of interest.

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