Chapter

Growth and Infrastructure

Dipankar Dasgupta

in Modern Growth Theory

Published in print November 2010 | ISBN: 9780198069966
Published online October 2012 | e-ISBN: 9780199080458 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780198069966.003.0005
Growth and Infrastructure

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Inadequate infrastructure is a serious constraint on the growth potential of developing economies. A growing economy can take advantage of any given infrastructure if the infrastructure can handle the growing demand from firms. Infrastructure growth, therefore, is correlated with economic development. Accordingly, this chapter examines the connection between infrastructure and economic growth. It introduces infrastructure in two different forms, a flow (such a clean environment) and a stock (such as public highways). It also discusses the private economy, growth rate vs. welfare maximization in a private economy, command economy vs. private economy and mixed economy, public input and congestion, proportional tax in a private economy, and balanced growth equilibrium.

Keywords: infrastructure; economic development; flow; stock; private economy; command economy; mixed economy; welfare maximization; congestion; proportional tax

Chapter.  10127 words.  Illustrated.

Subjects: Macroeconomics and Monetary Economics

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