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Logistics Infrastructure and Economic Growth
Omor SharifJaime Ketten
Qun Wang
ECON 705 Spring 2012
Attractions of this research
• Should countries invest on infrastructure?• Could we get money from invest on
infrastructure?• Does it help economic growth?
Empirical studies on Infrastructure and economic growth
• Positive relationship results• Easterly and Rebelo (1993) • World Bank (1994) • Yoshino and Nakahigashi (2000) • Yoshida (2000) • Negative relationship results • Deverajan, Swaroop and Zou (1996) • Mosley (1985) • Kocherlakota and Yi (1996)
Purpose for this research
• To determine whether countries invest in infrastructure
• To examine the relationship between infrastructure and economic growth in different areas
• Data source– World Bank– GDP in 2006 and 2009– 139 countries
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Infrastructure Data
• LPI index published by World Bank as a measure of a country's logistics performance (2006 and 2009)
• The ranking is on a continuous scale between 1- worst to 5- best.
• The factors considered in building LPI index are- Quality of infrastructure Competence of private and public logistics service providers Performance of customs and other borders agency Corruption and transparency Reliability of trading and supply chain.• LPI Based on a world-wide survey of global freight forwarders
and express carriers.
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International LPI: ranking
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Variables
• GDP (RGDPL)• Quality of Trade and Transport Infrastructure• Logistics Performance Index (LPI)• Cell Phone Use per 100 People• Population Density• Urban Population• Life Expectancy• South Asia, Europe, Middle East, Africa, Latin America, • Income Groups: Low, Lowmid, Upmid, OECD
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Variable DF Estimate Error t Value Pr > |t| Intercept 1 0.079184 0.011574 6.84 <.0001 inf06 1 -0.02156 0.004314 -5.00 <.0001
R-Square 0.15424
Variable DF Estimate Error t Value Pr > |t| Intercept 1 0.047034 0.030662 1.53 0.1274inf06 1 -0.02229 0.004361 -5.11 <.0001pop06 1 0.002092 0.001848 1.13 0.2595
R-Square 0.16190
SYSLIN procedure / 2 Stage Least Squares EstimationDependent Variable: GROWTH RATE
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Variable DF Estimate Error t Value Pr > |t| Intercept 1 -0.13343 0.111782 -1.19 0.2347inf06 1 -0.02936 0.007459 -3.94 0.0001pop06 1 0.005063 0.007857 0.64 0.5204urb06 1 -0.00252 0.008014 -0.31 0.7533life06 1 0.045055 0.026708 1.69 0.0939
R-Square 0.17625
Variable DF Estimate Error t Value Pr > |t|Intercept 1 0.047090 0.032157 1.46 0.1454inf06 1 -0.02231 0.006150 -3.63 0.0004
pop06 1 0.002048 0.007614 0.27 0.7884urb06 1 0.000047 0.007830 0.01 0.9952
R-Square 0.16189
SYSLIN procedure / 2 Stage Least Squares EstimationDependent Variable: GROWTH RATE
SYSLIN procedure / 2 Stage Least Squares EstimationDependent Variable: GROWTH RATE
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Variable DF Estimate Error t Value Pr > |t|
Intercept 1 0.088963 0.144387 0.62 0.5389Inf06 1 -0.04174 0.017179 -2.43 0.0165Pop06 1 -0.00207 0.009822 -0.21 0.8335Urb06 1 0.005389 0.010439 0.52 0.6066Life06 1 0.002069 0.035558 0.06 0.9537Sasia 1 -0.01556 0.018042 -0.86 0.3899Eur 1 -0.00489 0.021609 -0.23 0.8213Mideast 1 -0.03283 0.016991 -1.93 0.0555Afr 1 -0.03444 0.016778 -2.05 0.0421Latam 1 -0.01824 0.016691 -1.09 0.2766Pac 1 -0.00282 0.011531 -0.24 0.8075
R-Square 0.22252
SYSLIN procedure / 2 Stage Least Squares EstimationDependent Variable: GROWTH RATE
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Variable DF Estimate Error t Value Pr > |t| Intercept 1 -0.05672 0.115236 -0.49 0.6234Inf06 1 -0.02153 0.010927 -1.97 0.0509Pop06 1 0.014199 0.008984 1.58 0.1164Urb06 1 -0.01223 0.009467 -1.29 0.1986Life06 1 0.021142 0.028870 0.73 0.4653Low 1 -0.00069 0.009306 -0.07 0.9410Lowmid 1 0.006006 0.009691 0.62 0.5365Upmid 1 0.024165 0.010778 2.24 0.0267High 1 0.008690 0.010379 0.84 0.4040
R-Square 0.22314
SYSLIN procedure / 2 Stage Least Squares EstimationDependent Variable: GROWTH RATE
SYSLIN procedure / 2 Stage Least Squares EstimationDependent Variable: GROWTH RATE
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SYSLIN procedure / 2 Stage Least Squares EstimationDependent Variable: GDP2009
Variable DF Estimate Error t Value Pr > |t| Intercept 1 3.445936 0.363617 9.48 <.0001Inf06 1 2.035044 0.136241 14.94 <.0001
R-Square 0.61957
Variable DF Estimate Error t Value Pr > |t| Intercept 1 6.184289 0.870364 7.11 <.0001Inf06 1 2.111755 0.136616 15.46 <.0001Pop06 1 -0.18063 0.052277 -3.46 0.0007
R-Square 0.63816
SYSLIN procedure / 2 Stage Least Squares EstimationDependent Variable: GDP 2009
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Variable DF Estimate Error t Value Pr > |t| Intercept 1 6.639336 0.854975 7.77 <.0001Inf06 1 1.889878 0.199025 9.50 <.0001Pop06 1 -0.48564 0.218660 -2.22 0.0280Urb06 1 0.326180 0.228213 1.43 0.1552
R-Square 0.68282
Variable DF Estimate Error t Value Pr > |t| Intercept 1 -1.68302 2.429834 -0.69 0.4897Inf06 1 1.348620 0.215298 6.26 <.0001Pop06 1 -0.50418 0.167388 -3.01 0.0031Urb06 1 0.382722 0.175339 2.18 0.0308Life06 1 2.171434 0.610573 3.56 0.0005
R-Square 0.79162
SYSLIN procedure / 2 Stage Least Squares EstimationDependent Variable: GDP 2009
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Variable DF Estimate Error t Value Pr > |t| Intercept 1 0.421419 2.028337 0.21 0.8357Inf06 1 0.622163 0.241328 2.58 0.0111Pop06 1 -0.72212 0.137974 -5.23 <.0001Urb06 1 0.656572 0.146644 4.48 <.0001Life06 1 2.055050 0.499519 4.11 <.0001Sasia 1 -0.29453 0.253456 -1.16 0.2474Eur 1 -0.27386 0.303565 -0.90 0.3687Latam 1 -0.51601 0.234471 -2.20 0.0295Mideast 1 -0.50936 0.238687 -2.13 0.0347Pac 1 -0.67019 0.161988 -4.14 <.0001Afr 1 -0.90382 0.235702 -3.83 0.0002
R-Square 0.88437
SYSLIN procedure / 2 Stage Least Squares EstimationDependent Variable: GDP 2009
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Variable DF Estimate Error t Value Pr > |t| Intercept 1 -1.66727 2.110936 -0.79 0.4311Inf06 1 1.346779 0.200171 6.73 <.0001Pop06 1 -0.31267 0.164575 -1.90 0.0597Urb06 1 0.185938 0.173426 1.07 0.2856Life06 1 2.085674 0.528844 3.94 0.0001Low 1 0.074968 0.170479 0.44 0.6609Lowmid 1 0.530402 0.177533 2.99 0.0034Upmid 1 0.748831 0.197443 3.79 0.0002High 1 0.238451 0.190124 1.25 0.2120
R-Square 0.82865
SYSLIN procedure / 2 Stage Least Squares EstimationDependent Variable: GDP 2009
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Variable DF Estimate Error t Value Pr > |t|
Intercept 1 0.075925 0.008270 9.18 <.0001Inf 1 -0.02005 0.003043 -6.59 <.0001
R-Square 0.13588
SYSLIN procedure / 2 Stage Least Squares EstimationDependent Variable: GROWTH RATE (278 Samples)
Variable DF Estimate Error t Value Pr > |t|
Intercept 1 0.040119 0.021758 1.84 0.0663Inf 1 -0.02099 0.003080 -6.81 <.0001Pop 1 0.002351 0.001322 1.78 0.0765
R-Square 0.14546
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Variable DF Estimate Error t Value Pr > |t| Intercept 1 0.040833 0.022749 1.79 0.0738Inf 1 -0.02327 0.004727 -4.92 <.0001Pop 1 0.001907 0.005625 0.34 0.7349Popdens 1 4.47E-6 2.601E-6 1.72 0.0869
Urbpop 1 0.000740 0.005852 0.13 0.8995R-Square 0.15388
Variable DF Estimate Error t Value Pr > |t| Intercept 1 -0.14245 0.083282 -1.71 0.0883Inf 1 -0.02844 0.005647 -5.04 <.0001Pop 1 0.004905 0.005702 0.86 0.3904Urbpop 1 -0.00197 0.005872 -0.34 0.7374Life 1 0.045331 0.019947 2.27 0.0238
R-Square 0.15844
SYSLIN procedure / 2 Stage Least Squares EstimationDependent Variable: GROWTH RATE (278 Samples)
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PANEL STUDY RESULTS Dependent Variable: Growth Rate
Variable DF Estimate Error t Value Pr > |t|
Intercept 1 0.088116 0.102019 0.86 0.3885Inf 1 -0.03683 0.012165 -3.03 0.0027Pop 1 -0.00155 0.007075 -0.22 0.8266Urbpop 1 0.005111 0.007646 0.67 0.5044Life 1 -0.00231 0.025214 -0.09 0.9272Sasia 1 -0.00874 0.011953 -0.73 0.4653Eur 1 0.004750 0.013975 0.34 0.7342Mideast 1 -0.02836 0.011586 -2.45 0.0150Afr 1 -0.03220 0.012030 -2.68 0.0079Latam 1 -0.01293 0.011370 -1.14 0.2565Pac 1 -0.00196 0.007934 -0.25 0.8055
R-Square 0.21727
SYSLIN procedure / 2 Stage Least Squares EstimationDependent Variable: GROWTH RATE (278 Samples)
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PANEL STUDY RESULTS Dependent Variable: Growth Rate
Variable DF Estimate Error t Value Pr > |t| Intercept 1 -0.03139 0.087912 -0.36 0.7214Inf 1 -0.01520 0.008741 -1.74 0.0832Pop 1 0.016682 0.006715 2.48 0.0136Urbpop 1 -0.01502 0.007236 -2.08 0.0389Life 1 0.011648 0.022310 0.52 0.6020Low 1 0.001844 0.006686 0.28 0.7829Lowmid 1 0.009333 0.007128 1.31 0.1915Upmid 1 0.027541 0.007925 3.48 0.0006High 1 0.006879 0.007229 0.95 0.3422
R-Square 0.20970
SYSLIN procedure / 2 Stage Least Squares EstimationDependent Variable: GROWTH RATE (278 Samples)
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PANEL STUDY RESULTS Dependent Variable: GDP
Variable DF Estimate Error t Value Pr > |t| Intercept 1 3.970727 0.209457 18.96 <.0001Inf 1 1.796615 0.077067 23.31 <.0001
R-Square 0.66320
SYSLIN procedure / 2 Stage Least Squares EstimationDependent Variable: GDP (278 Samples)
Variable DF Estimate Error t Value Pr > |t| Intercept 1 6.856595 0.532143 12.88 <.0001Inf 1 1.872628 0.075337 24.86 <.0001Pop 1 -0.18945 0.032327 -5.86 <.0001
R-Square 0.69289
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Variable DF Estimate Error t Value Pr > |t| Intercept 1 7.519486 0.488020 15.41 <.0001Inf 1 1.612807 0.101404 15.90 <.0001Pop 1 -0.74957 0.120675 -6.21 <.0001Popdens 1 -0.00017 0.000056 -3.01 0.0029Urbpop 1 0.587837 0.125550 4.68 <.0001
R-Square 0.75457
Variable DF Estimate Error t Value Pr > |t| Intercept 1 -3.86567 1.371228 -2.82 0.0052Inf 1 1.031105 0.092984 11.09 <.0001Pop 1 -0.65341 0.093877 -6.96 <.0001Urbpop 1 0.542646 0.096679 5.61 <.0001Life 1 2.847646 0.328421 8.67 <.0001
R-Square 0.84344
SYSLIN procedure / 2 Stage Least Squares EstimationDependent Variable: GDP (278 Samples)
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PANEL STUDY RESULTS Dependent Variable: GDP
Variable DF Estimate Error t Value Pr > |t| Intercept 1 -0.33207 1.388229 -0.24 0.8111Inf 1 0.482878 0.165530 2.92 0.0038Pop 1 -0.77472 0.096268 -8.05 <.0001Urbpop 1 0.711850 0.104043 6.84 <.0001Life 1 2.324046 0.343100 6.77 <.0001Sasia 1 -0.47846 0.162654 -2.94 0.0036Eur 1 -0.53801 0.190163 -2.83 0.0050Mideast 1 -0.61039 0.157653 -3.87 0.0001Afr 1 -0.97833 0.163700 -5.98 <.0001Latam 1 -0.67231 0.154714 -4.35 <.0001Pac 1 -0.70815 0.107961 -6.56 <.0001
R-Square 0.89413
SYSLIN procedure / 2 Stage Least Squares EstimationDependent Variable: GDP (278 Samples)
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PANEL STUDY RESULTS Dependent Variable: GDP
Variable DF Estimate Error t Value Pr > |t| Intercept 1 0.308366 1.719194 0.18 0.8578Inf 1 1.633647 0.170932 9.56 <.0001Pop 1 -0.18536 0.131315 -1.41 0.1592Urbpop 1 0.013264 0.141502 0.09 0.9254Life 1 1.546110 0.436299 3.54 0.0005Low 1 0.171979 0.130747 1.32 0.1895Lowmid 1 0.656368 0.139390 4.71 <.0001Upmid 1 0.870375 0.154987 5.62 <.0001High 1 0.234528 0.141373 1.66 0.0983
R-Square 0.81272
SYSLIN procedure / 2 Stage Least Squares EstimationDependent Variable: GDP (278 Samples)
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Variable DF Estimate Error t Value Pr > |t| CS1 1 -3.76505 0.1109 -33.94 <.0001CS138 1 -3.19366 0.1014 -31.50 <.0001 Intercept 1 10.41614 0.1366 76.26 <.0001Inf 1 0.032526 0.0313 1.04 0.3000Year 1 0.066734 0.00921 7.25 <.0001
R-Square 0.9985
PANEL Procedure / Fixed One Way EstimatesDependent Var: GDP (Cross Section = 139, Time Series = 2)
Variable DF Estimate Error t Value Pr > |t| CS1 1 -3.10206 0.3313 -9.36 <.0001 CS138 1 -2.24647 0.4577 -4.91 <.0001 Intercept 1 4.678208 2.7091 1.73 0.0865 Inf 1 0.03285 0.0309 1.06 0.2892Pop 1 0.294917 0.1391 2.12 0.0358Year 1 0.051621 0.0116 4.47 <.0001
R-Square 0.9985
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Variable DF Estimate Error t Value Pr > |t| CS1 1 -1.772 0.5441 -3.26 0.0014 CS138 1 -1.38726 0.5272 -2.63 0.0095 Intercept 1 5.471969 2.6440 2.07 0.0404Inf 1 0.048481 0.0304 1.59 0.1134Pop 1 -0.83954 0.3979 -2.11 0.0367Urbpop 1 1.103951 0.3642 3.03 0.0029Year 1 0.026932 0.0139 1.94 0.0542
R-Square 0.9986
PANEL Procedure / Fixed One Way EstimatesDependent Var: GDP (Cross Section = 139, Time Series = 2)
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PANEL PROCEDURE RESULTSFIXED ONE WAY ESTIMATES
Dependent Variable: GDP
Variable DF Estimate Error t Value Pr > |t| CS1 1 -1.66941 0.5907 -2.83 0.0054 CS138 1 -1.25496 0.6039 -2.08 0.0396 Intercept 1 3.79932 4.5417 0.84 0.4043Inf 1 0.048505 0.0305 1.59 0.1143Pop 1 -0.77466 0.4239 -1.83 0.0699Urbpop 1 1.033243 0.3971 2.60 0.0103Life 1 0.4083 0.9000 0.45 0.6508
Year 1 0.022866 0.0165 1.38 0.1692R-Square 0.9986
PANEL Procedure / Fixed One Way EstimatesDependent Var: GDP (Cross Section = 139, Time Series = 2)
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Parameter Estimate Error t Value Pr > |t| Intercept 0.0730293 0.01176605 6.21 <.0001Inf06 -0.0192010 0.00386650 -4.97 <.0001
R-square 0.1569
SURVEYREG Procedure / Clusters = 139, DOF = 138Dependent Var: Growth Rate
Parameter Estimate Error t Value Pr > |t| Intercept 0.0429448 0.03412800 1.26 0.2104Inf06 -0.0197224 0.00395885 -4.98 <.0001Pop06 0.0019330 0.00207526 0.93 0.3533
R-square 0.1637
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Parameter Estimate Error t Value Pr > |t| Intercept 0.0392951 0.03541769 1.11 0.2692inf06 -0.0181495 0.00473182 -3.84 0.0002pop06 0.0054289 0.00766120 0.71 0.4798urb06 -0.0036768 0.00745685 -0.49 0.6227
R-square 0.1654
SURVEYREG Procedure / Clusters = 139, DOF = 138Dependent Var: Growth Rate
Parameter Estimate Error t Value Pr > |t| Intercept -0.0767370 0.10747903 -0.71 0.4765inf06 -0.0209545 0.00483316 -4.34 <.0001pop06 0.0086201 0.00787032 1.10 0.2753urb06 -0.0067225 0.00777550 -0.86 0.3888life06 0.0282100 0.02556836 1.10 0.2718
R-square 0.1735
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Parameter Estimate Error t Value Pr > |t| Intercept 4.97606535 0.22423336 22.19 <.0001Inf06 1.44786498 0.07111614 20.36 <.0001
R-square 0.6227
SURVEYREG Procedure / Clusters = 139, DOF = 138Dependent Var: GDP 2009
Parameter Estimate Error t Value Pr > |t| Intercept 7.1818017 0.78916487 9.10 <.0001Inf06 1.4860911 0.07035441 21.12 <.0001Pop06 -0.1417202 0.04740760 -2.99 0.0033
R-square 0.6481
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SURVEYREG PROCEDURE REGRESSION RESULTSDependent Variable: GDP2009
Parameter Estimate Error t Value Pr > |t| Intercept 8.2868366 0.68904769 12.03 <.0001Inf06 1.0098468 0.09053863 11.15 <.0001Pop06 -1.2002088 0.16394209 -7.32 <.0001Urb06 1.1132604 0.16460550 6.76 <.0001
R-square 0.7550
SURVEYREG Procedure / Clusters = 139, DOF = 138Dependent Var: GDP 2009
Parameter Estimate Error t Value Pr > |t| Intercept -6.3570985 2.09044902 -3.04 0.0028Inf06 0.6558352 0.07860621 8.34 <.0001Pop06 -0.7974655 0.14381317 -5.55 <.0001Urb06 0.7288757 0.14096802 5.17 <.0001Life06 3.5602720 0.47437483 7.51 <.0001
R-square 0.8458
CONCLUSION
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Both LPI and Trade and Transport Infrastructure seem to positively affect Log(RGDPL). LPI is always significant, while Infrastructure loses significance when each country is accounted for, LPI remains significant.
Upper-middle, Lower-middle, and Low income countries are significantly different from OECD countries. High income (non-OECD) countries are not.
All regions developing countries are significantly different from developed countries.
Change in LPI and change in Infrastructure are not significant, but may positively affect change in Log(RGDPL).
LPI and Infrastructure negatively affect change in Log(RGDPL).