2017年-世界发展银行全球_Public_Infrastructure_and_Structural_Transformation_55页_2mb

Summary of "Public Infrastructure and Structural Transformation"

Core Content

This working paper explores the role of public infrastructure in the structural transformation process of an economy. Structural transformation refers to the reallocation of productive resources from less productive sectors (like agriculture) to more productive ones (like manufacturing and services). The paper argues that public infrastructure is a neglected but crucial driver of this transformation, as it enhances private productivity and reduces entry barriers for firms.

Main Viewpoints

• Public infrastructure is a key complementary factor to private production inputs, including roads, electricity, and communication networks.
• It plays a dual role:
  • Increasing productivity of private inputs by improving the efficiency of production processes.
  • Reducing fixed operating costs for firms, which affects their entry and exit decisions.
• The interaction between public infrastructure and structural transformation is not fully understood, and this paper aims to fill that gap by developing a multisector neoclassical growth model with heterogeneous firms.
• The model shows that public capital formation accelerates structural transformation by:
  • Increasing returns in sectors with higher public capital intensity.
  • Lowering the relative cost of entry in these sectors.
• The effect on GDP per capita is also significant, with public capital formation explaining 15% of the structural transformation process in Brazil between 1995 and 2013.
• The model is calibrated using Brazilian data, which includes detailed information on GVA, employment, and firm size across sectors.

Key Information

Data and Context

• The paper uses Brazilian data from 1995 to 2013, focusing on the post-hyperinflation period.
• Brazil has significant infrastructure gaps, despite recent expansion, as shown by its 116th rank in the Global Competitiveness Report (2016-17).
• The data reveals:
  • A decline in the value added shares of agriculture and manufacturing.
  • An increase in the services sector.
  • Manufacturing has the largest firms, followed by services, and then agriculture.
  • The average firm size remains stable across sectors.

Model Assumptions and Structure

• The economy consists of three sectors: agriculture, manufacturing, and services.
• Manufacturing is the numeraire.
• Capital markets are open, while other markets are closed.
• Heterogeneous firms are allowed to enter and exit markets freely.
• Public infrastructure is a non-rival good provided by rent-seeking politicians and financed by lump-sum taxes.

Quantitative Results

• Public capital formation explains:
  • 5% of the variation in manufacturing GVA shares.
  • 15% of the variation in services GVA shares.
  • 59% of the combined effect of public infrastructure and total factor productivity (TFP) growth in the agriculture sector.
• Policy simulations show that:
  • Maintaining a higher GDP share of public capital in the 1970s would increase GDP per capita by 10%.
  • Improving public investment management leads to stronger capital accumulation, though the GVA shares remain largely unchanged.
  • Rent-seeking behavior of the government has no significant effect on the structural transformation or GDP per capita.
  • Reducing public capital effectiveness in certain sectors leads to negative effects on GDP per capita and potentially reduces the size of the manufacturing sector.

Theoretical Contributions

• The paper introduces public infrastructure as a supply-side mechanism for structural transformation, distinguishing it from previous models that focused on:
  • Consumer preferences (e.g., Konsamut, Rebelo, and Xie, 2001).
  • Sector-biased technical change (e.g., Baumol, 1967; Ngai and Pissarides, 2007).
• It also emphasizes firm size heterogeneity and the role of public capital in reducing entry barriers.
• The model accounts for fixed costs that are influenced by public infrastructure quality and sector-specific characteristics.

Conclusion

The paper concludes that public infrastructure is a critical but underappreciated factor in structural transformation. It contributes to the reallocation of resources across sectors by enhancing productivity and lowering entry costs. The findings highlight the importance of investment in public capital for economic development and suggest that policy reforms in this area could significantly improve GDP per capita and sectoral efficiency.

References to Related Literature

• The paper builds on earlier work by:
  • Herrendorf et al. (2014), who studied the reallocation of resources during structural transformation.
  • Aschauer (1989), who emphasized the importance of public capital in economic growth.
  • Ngai and Pissarides (2007), who explored sector-biased technical change.
• It also references studies on transport costs and spatial distribution of economic activity, though these focus on static models and are not directly related to the supply-side mechanism of public infrastructure.

Policy Implications

• Public capital formation is essential for accelerating structural transformation.
• Improving the efficiency of public capital can lead to better economic outcomes.
• Maintaining a high level of public investment is beneficial for GDP growth and sectoral reallocation.
• Reducing fixed costs through better infrastructure can enhance firm productivity and facilitate entry into more productive sectors.