The Growth and Distributive Impacts of Public Infrastructure Investments in the Philippines

This study investigates the role of public infrastructure investment on economic growth and poverty reduction in the Philippines. Using a dynamic general equilibrium-microsimulation model that explicitly models public capital as a production input, we find that the positive supply side effects of higher public investment expenditure manifest over time, through higher capital accumulation and improved productivity. Our findings reveal that higher public infrastructure investment not only positively impacts real GDP, but also reduces poverty and inequality in the short and long run. In this context, the Philippine government needs to become more proactive in finding ways to finance higher public investment expenditures. This is especially relevant with respect to international financing, given the narrow tax base in the country. Our simulation results confirm that international financing is a better alternative than tax financing when considered in terms of its ability to improve the economy’s physical infrastructure in order to create job opportunities, improve productivity and complement its social protection measures.


Subject(s):
Issue Date:
Dec 19 2012
Publication Type:
Working or Discussion Paper
DOI and Other Identifiers:
Record Identifier:
https://ageconsearch.umn.edu/record/164410
PURL Identifier:
http://purl.umn.edu/164410
Total Pages:
42
JEL Codes:
D58, D90, E27, F35, F43, I32, O16, O53
Series Statement:
MPIA
1355939534




 Record created 2017-04-01, last modified 2020-10-28

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