Can efficient transport moderate real sector productivity?

Abstract

Purpose This study aims to test the role of infrastructure for economic growth. For this purpose, panel data of the world is selected from 1998 to 2018 and the study has used slope moderator to test the productivity of real economic activity with economic growth. Design/methodology/approach In this context, the feasible generalized least square method is adopted to estimate the results. Four types of infrastructure indicators i.e. quality of air, port, rail and road are used along with disaggregated GDP. Findings According to the results of this study, the role of industrial and agricultural value addition without infrastructure is negative. For industrial value addition, the cross product with all infrastructure types positively impacts economic growth. All the infrastructures, along with services value addition, except seaport, are contributing to economic growth positively. Along with agriculture value addition, only road infrastructure is contributing to economic growth positively. This study has also used two control variables i.e. quality of education and institutions. These variables are also found to be positive and significant with economic growth. Originality/value This study explores the moderating role of quality of infrastructure sector on real sector productivity, which is leading to economic growth.