THE IMPACT OF DISAGGREGATED INFRASTRUCTURE CAPITAL ON THE PRODUCTIVITY GROWTH OF THE CHILEAN ECONOMY

The aim of this study is to estimate the productivity contribution of the main components of the infrastructure capital to the Chilean economy, over the 1960-2000 period. We develop a cost function framework that allows us to decompose the growth of total factor productivity into relevant contributions, which are then estimated via a translog function. Our estimates indicate that infrastructure capital was on the whole cost saving, but enhanced only moderately the productivity of the Chilean economy. Investment in electricity infrastructure systematically managed to tap such cost savings. This was also important for transport infrastructures over the 1990s, although it systematically failed for telecommunications. But the large contribution of economies of scale to total factor productivity might have also been indirectly stimulated by infrastructure in complex societal and economic ways. Copyright © 2007 The Authors; Journal compilation © 2007 Blackwell Publishing Ltd and The University of Manchester.