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Logistics Infrastructure and Economic Growth

ECON 705 Spring 2012. Logistics Infrastructure and Economic Growth. Omor Sharif Jaime Ketten Qun Wang. Attractions of this research. Should countries invest on infrastructure? Could we get money from invest on infrastructure? Does it help economic growth?.

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Logistics Infrastructure and Economic Growth

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  1. ECON 705 Spring 2012 Logistics Infrastructure and Economic Growth Omor Sharif Jaime Ketten QunWang

  2. Attractions of this research • Should countries invest on infrastructure? • Could we get money from invest on infrastructure? • Does it help economic growth?

  3. 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)

  4. 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

  5. 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.

  6. International LPI: ranking

  7. 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

  8. SYSLIN procedure / 2 Stage Least Squares Estimation Dependent Variable: GROWTH RATE 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 0.1274 inf06 1 -0.02229 0.004361 -5.11 <.0001 pop06 1 0.002092 0.001848 1.13 0.2595 R-Square 0.16190

  9. SYSLIN procedure / 2 Stage Least Squares Estimation • Dependent Variable: GROWTH RATE Variable DF Estimate Error t Value Pr > |t| Intercept 1 0.047090 0.032157 1.46 0.1454 inf06 1 -0.02231 0.006150 -3.63 0.0004 pop06 1 0.002048 0.007614 0.27 0.7884 urb06 1 0.000047 0.007830 0.01 0.9952 R-Square 0.16189 SYSLIN procedure / 2 Stage Least Squares Estimation Dependent Variable: GROWTH RATE Variable DF Estimate Error t Value Pr > |t| Intercept 1 -0.13343 0.111782 -1.19 0.2347 inf06 1 -0.02936 0.007459 -3.94 0.0001 pop06 1 0.005063 0.007857 0.64 0.5204 urb06 1 -0.00252 0.008014 -0.31 0.7533 life06 1 0.045055 0.026708 1.69 0.0939 R-Square 0.17625  

  10. Variable DF Estimate Error t Value Pr > |t| Intercept 1 0.088963 0.144387 0.62 0.5389 Inf06 1 -0.04174 0.017179 -2.43 0.0165 Pop06 1 -0.00207 0.009822 -0.21 0.8335 Urb06 1 0.005389 0.010439 0.52 0.6066 Life06 1 0.002069 0.035558 0.06 0.9537 Sasia 1 -0.01556 0.018042 -0.86 0.3899 Eur 1 -0.00489 0.021609 -0.23 0.8213 Mideast 1 -0.03283 0.016991 -1.93 0.0555 Afr 1 -0.03444 0.016778 -2.05 0.0421 Latam 1 -0.01824 0.016691 -1.09 0.2766 Pac 1 -0.00282 0.011531 -0.24 0.8075 R-Square 0.22252 SYSLIN procedure / 2 Stage Least Squares Estimation Dependent Variable: GROWTH RATE

  11. SYSLIN procedure / 2 Stage Least Squares Estimation Dependent Variable: GROWTH RATE SYSLIN procedure / 2 Stage Least Squares Estimation Dependent Variable: GROWTH RATE Variable DF Estimate Error t Value Pr > |t| Intercept 1 -0.05672 0.115236 -0.49 0.6234 Inf06 1 -0.02153 0.010927 -1.97 0.0509 Pop06 1 0.014199 0.008984 1.58 0.1164 Urb06 1 -0.01223 0.009467 -1.29 0.1986 Life06 1 0.021142 0.028870 0.73 0.4653 Low 1 -0.00069 0.009306 -0.07 0.9410 Lowmid 1 0.006006 0.009691 0.62 0.5365 Upmid 1 0.024165 0.010778 2.24 0.0267 High 1 0.008690 0.010379 0.84 0.4040 R-Square 0.22314

  12. SYSLIN procedure / 2 Stage Least Squares EstimationDependent Variable: GDP2009 SYSLIN procedure / 2 Stage Least Squares Estimation Dependent Variable: GDP 2009 Variable DF Estimate Error t Value Pr > |t| Intercept 1 3.445936 0.363617 9.48 <.0001 Inf06 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 <.0001 Inf06 1 2.111755 0.136616 15.46 <.0001 Pop06 1 -0.18063 0.052277 -3.46 0.0007 R-Square 0.63816

  13. Variable DF Estimate Error t Value Pr > |t| Intercept 1 6.639336 0.854975 7.77 <.0001 Inf06 1 1.889878 0.199025 9.50 <.0001 Pop06 1 -0.48564 0.218660 -2.22 0.0280 Urb06 1 0.326180 0.228213 1.43 0.1552 R-Square 0.68282   SYSLIN procedure / 2 Stage Least Squares Estimation Dependent Variable: GDP 2009 Variable DF Estimate Error t Value Pr > |t| Intercept 1 -1.68302 2.429834 -0.69 0.4897 Inf06 1 1.348620 0.215298 6.26 <.0001 Pop06 1 -0.50418 0.167388 -3.01 0.0031 Urb06 1 0.382722 0.175339 2.18 0.0308 Life06 1 2.171434 0.610573 3.56 0.0005 R-Square 0.79162  

  14. SYSLIN procedure / 2 Stage Least Squares Estimation Dependent Variable: GDP 2009 Variable DF Estimate Error t Value Pr > |t| Intercept 1 0.421419 2.028337 0.21 0.8357 Inf06 1 0.622163 0.241328 2.58 0.0111 Pop06 1 -0.72212 0.137974 -5.23 <.0001 Urb06 1 0.656572 0.146644 4.48 <.0001 Life06 1 2.055050 0.499519 4.11 <.0001 Sasia 1 -0.29453 0.253456 -1.16 0.2474 Eur 1 -0.27386 0.303565 -0.90 0.3687 Latam 1 -0.51601 0.234471 -2.20 0.0295 Mideast 1 -0.50936 0.238687 -2.13 0.0347 Pac 1 -0.67019 0.161988 -4.14 <.0001 Afr 1 -0.90382 0.235702 -3.83 0.0002 R-Square 0.88437

  15. SYSLIN procedure / 2 Stage Least Squares Estimation Dependent Variable: GDP 2009 Variable DF Estimate Error t Value Pr > |t| Intercept 1 -1.66727 2.110936 -0.79 0.4311 Inf06 1 1.346779 0.200171 6.73 <.0001 Pop06 1 -0.31267 0.164575 -1.90 0.0597 Urb06 1 0.185938 0.173426 1.07 0.2856 Life06 1 2.085674 0.528844 3.94 0.0001 Low 1 0.074968 0.170479 0.44 0.6609 Lowmid 1 0.530402 0.177533 2.99 0.0034 Upmid 1 0.748831 0.197443 3.79 0.0002 High 1 0.238451 0.190124 1.25 0.2120 R-Square 0.82865

  16. SYSLIN procedure / 2 Stage Least Squares Estimation Dependent Variable: GROWTH RATE (278 Samples) Variable DF Estimate Error t Value Pr > |t| Intercept 1 0.075925 0.008270 9.18 <.0001 Inf 1 -0.02005 0.003043 -6.59 <.0001 R-Square 0.13588   Variable DF Estimate Error t Value Pr > |t| Intercept 1 0.040119 0.021758 1.84 0.0663 Inf 1 -0.02099 0.003080 -6.81 <.0001 Pop 1 0.002351 0.001322 1.78 0.0765 R-Square 0.14546  

  17. SYSLIN procedure / 2 Stage Least Squares Estimation Dependent Variable: GROWTH RATE (278 Samples) Variable DF Estimate Error t Value Pr > |t| Intercept 1 0.040833 0.022749 1.79 0.0738 Inf 1 -0.02327 0.004727 -4.92 <.0001 Pop 1 0.001907 0.005625 0.34 0.7349 Popdens 1 4.47E-6 2.601E-6 1.72 0.0869 Urbpop 1 0.000740 0.005852 0.13 0.8995 R-Square 0.15388 Variable DF Estimate Error t Value Pr > |t| Intercept 1 -0.14245 0.083282 -1.71 0.0883 Inf 1 -0.02844 0.005647 -5.04 <.0001 Pop 1 0.004905 0.005702 0.86 0.3904 Urbpop 1 -0.00197 0.005872 -0.34 0.7374 Life 1 0.045331 0.019947 2.27 0.0238 R-Square 0.15844  

  18. SYSLIN procedure / 2 Stage Least Squares Estimation Dependent Variable: GROWTH RATE (278 Samples) Panel Study ResultsDependent Variable: Growth Rate Variable DF Estimate Error t Value Pr > |t| Intercept 1 0.088116 0.102019 0.86 0.3885 Inf 1 -0.03683 0.012165 -3.03 0.0027 Pop 1 -0.00155 0.007075 -0.22 0.8266 Urbpop 1 0.005111 0.007646 0.67 0.5044 Life 1 -0.00231 0.025214 -0.09 0.9272 Sasia 1 -0.00874 0.011953 -0.73 0.4653 Eur 1 0.004750 0.013975 0.34 0.7342 Mideast 1 -0.02836 0.011586 -2.45 0.0150 Afr 1 -0.03220 0.012030 -2.68 0.0079 Latam 1 -0.01293 0.011370 -1.14 0.2565 Pac 1 -0.00196 0.007934 -0.25 0.8055 R-Square 0.21727

  19. SYSLIN procedure / 2 Stage Least Squares Estimation Dependent Variable: GROWTH RATE (278 Samples) Panel Study ResultsDependent Variable: Growth Rate Variable DF Estimate Error t Value Pr > |t| Intercept 1 -0.03139 0.087912 -0.36 0.7214 Inf 1 -0.01520 0.008741 -1.74 0.0832 Pop 1 0.016682 0.006715 2.48 0.0136 Urbpop 1 -0.01502 0.007236 -2.08 0.0389 Life 1 0.011648 0.022310 0.52 0.6020 Low 1 0.001844 0.006686 0.28 0.7829 Lowmid 1 0.009333 0.007128 1.31 0.1915 Upmid 1 0.027541 0.007925 3.48 0.0006 High 1 0.006879 0.007229 0.95 0.3422 R-Square 0.20970

  20. SYSLIN procedure / 2 Stage Least Squares Estimation Dependent Variable: GDP (278 Samples) Panel Study ResultsDependent Variable: GDP Variable DF Estimate Error t Value Pr > |t| Intercept 1 3.970727 0.209457 18.96 <.0001 Inf 1 1.796615 0.077067 23.31 <.0001 R-Square 0.66320   Variable DF Estimate Error t Value Pr > |t| Intercept 1 6.856595 0.532143 12.88 <.0001 Inf 1 1.872628 0.075337 24.86 <.0001 Pop 1 -0.18945 0.032327 -5.86 <.0001 R-Square 0.69289

  21. SYSLIN procedure / 2 Stage Least Squares Estimation Dependent Variable: GDP (278 Samples) Variable DF Estimate Error t Value Pr > |t| Intercept 1 7.519486 0.488020 15.41 <.0001 Inf 1 1.612807 0.101404 15.90 <.0001 Pop 1 -0.74957 0.120675 -6.21 <.0001 Popdens 1 -0.00017 0.000056 -3.01 0.0029 Urbpop 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 0.0052 Inf 1 1.031105 0.092984 11.09 <.0001 Pop 1 -0.65341 0.093877 -6.96 <.0001 Urbpop 1 0.542646 0.096679 5.61 <.0001 Life 1 2.847646 0.328421 8.67 <.0001 R-Square 0.84344

  22. SYSLIN procedure / 2 Stage Least Squares Estimation Dependent Variable: GDP (278 Samples) Panel Study ResultsDependent Variable: GDP Variable DF Estimate Error t Value Pr > |t| Intercept 1 -0.33207 1.388229 -0.24 0.8111 Inf 1 0.482878 0.165530 2.92 0.0038 Pop 1 -0.77472 0.096268 -8.05 <.0001 Urbpop 1 0.711850 0.104043 6.84 <.0001 Life 1 2.324046 0.343100 6.77 <.0001 Sasia 1 -0.47846 0.162654 -2.94 0.0036 Eur 1 -0.53801 0.190163 -2.83 0.0050 Mideast 1 -0.61039 0.157653 -3.87 0.0001 Afr 1 -0.97833 0.163700 -5.98 <.0001 Latam 1 -0.67231 0.154714 -4.35 <.0001 Pac 1 -0.70815 0.107961 -6.56 <.0001 R-Square 0.89413

  23. SYSLIN procedure / 2 Stage Least Squares Estimation Dependent Variable: GDP (278 Samples) Panel Study ResultsDependent Variable: GDP Variable DF Estimate Error t Value Pr > |t| Intercept 1 0.308366 1.719194 0.18 0.8578 Inf 1 1.633647 0.170932 9.56 <.0001 Pop 1 -0.18536 0.131315 -1.41 0.1592 Urbpop 1 0.013264 0.141502 0.09 0.9254 Life 1 1.546110 0.436299 3.54 0.0005 Low 1 0.171979 0.130747 1.32 0.1895 Lowmid 1 0.656368 0.139390 4.71 <.0001 Upmid 1 0.870375 0.154987 5.62 <.0001 High 1 0.234528 0.141373 1.66 0.0983 R-Square 0.81272  

  24. PANEL Procedure / Fixed One Way Estimates Dependent Var: GDP (Cross Section = 139, Time Series = 2) Variable DF Estimate Error t Value Pr > |t| CS1 1 -3.76505 0.1109 -33.94 <.0001 CS138 1 -3.19366 0.1014 -31.50 <.0001 Intercept 1 10.41614 0.1366 76.26 <.0001 Inf 1 0.032526 0.0313 1.04 0.3000 Year 1 0.066734 0.00921 7.25 <.0001 R-Square 0.9985 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 0.2892 Pop 1 0.294917 0.1391 2.12 0.0358 Year 1 0.051621 0.0116 4.47 <.0001 R-Square 0.9985

  25. PANEL Procedure / Fixed One Way Estimates Dependent Var: GDP (Cross Section = 139, Time Series = 2) 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 0.0404 Inf 1 0.048481 0.0304 1.59 0.1134 Pop 1 -0.83954 0.3979 -2.11 0.0367 Urbpop 1 1.103951 0.3642 3.03 0.0029 Year 1 0.026932 0.0139 1.94 0.0542 R-Square 0.9986

  26. Panel Procedure ResultsFixed One Way EstimatesDependent Variable: GDP PANEL Procedure / Fixed One Way Estimates Dependent Var: GDP (Cross Section = 139, Time Series = 2) 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 0.4043 Inf 1 0.048505 0.0305 1.59 0.1143 Pop 1 -0.77466 0.4239 -1.83 0.0699 Urbpop 1 1.033243 0.3971 2.60 0.0103 Life 1 0.4083 0.9000 0.45 0.6508 Year 1 0.022866 0.0165 1.38 0.1692 R-Square 0.9986

  27. SURVEYREG Procedure / Clusters = 139, DOF = 138 Dependent Var: Growth Rate Parameter Estimate Error t Value Pr > |t| Intercept 0.0730293 0.01176605 6.21 <.0001 Inf06 -0.0192010 0.00386650 -4.97 <.0001 R-square 0.1569 Parameter Estimate Error t Value Pr > |t| Intercept 0.0429448 0.03412800 1.26 0.2104 Inf06 -0.0197224 0.00395885 -4.98 <.0001 Pop06 0.0019330 0.00207526 0.93 0.3533 R-square 0.1637

  28. SURVEYREG Procedure / Clusters = 139, DOF = 138 Dependent Var: Growth Rate Parameter Estimate Error t Value Pr > |t| Intercept 0.0392951 0.03541769 1.11 0.2692 inf06 -0.0181495 0.00473182 -3.84 0.0002 pop06 0.0054289 0.00766120 0.71 0.4798 urb06 -0.0036768 0.00745685 -0.49 0.6227 R-square 0.1654 Parameter Estimate Error t Value Pr > |t| Intercept -0.0767370 0.10747903 -0.71 0.4765 inf06 -0.0209545 0.00483316 -4.34 <.0001 pop06 0.0086201 0.00787032 1.10 0.2753 urb06 -0.0067225 0.00777550 -0.86 0.3888 life06 0.0282100 0.02556836 1.10 0.2718 R-square 0.1735

  29. SURVEYREG Procedure / Clusters = 139, DOF = 138 Dependent Var: GDP 2009 Parameter Estimate Error t Value Pr > |t| Intercept 4.97606535 0.22423336 22.19 <.0001 Inf06 1.44786498 0.07111614 20.36 <.0001 R-square 0.6227 Parameter Estimate Error t Value Pr > |t| Intercept 7.1818017 0.78916487 9.10 <.0001 Inf06 1.4860911 0.07035441 21.12 <.0001 Pop06 -0.1417202 0.04740760 -2.99 0.0033 R-square 0.6481

  30. Surveyreg Procedure Regression ResultsDependent Variable: GDP2009 SURVEYREG Procedure / Clusters = 139, DOF = 138 Dependent Var: GDP 2009 Parameter Estimate Error t Value Pr > |t| Intercept 8.2868366 0.68904769 12.03 <.0001 Inf06 1.0098468 0.09053863 11.15 <.0001 Pop06 -1.2002088 0.16394209 -7.32 <.0001 Urb06 1.1132604 0.16460550 6.76 <.0001 R-square 0.7550 Parameter Estimate Error t Value Pr > |t| Intercept -6.3570985 2.09044902 -3.04 0.0028 Inf060.6558352 0.07860621 8.34 <.0001 Pop06 -0.7974655 0.14381317 -5.55 <.0001 Urb06 0.7288757 0.14096802 5.17 <.0001 Life06 3.5602720 0.47437483 7.51 <.0001 R-square 0.8458

  31. Conclusion • 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).

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