# **TABLE 3 : INFRASTRUCTURE STOCKS AND ECONOMIC GROWTH: PANEL REGRESSION ANALYSIS USING** **<u>DIFFERENT ESTIMATION TECHNIQUES</u>**

_Dependent Variable: Growth in GDP per Capita -_ _<u>Sample of 121 countries, 1960 2000 (5 year averaged rate)</u>_

|_Sample of 121 co_|_untries, 1960- 2000_|_(5 year averaged_|_rate)_||**GMM-IV System Es**|**timator 1/**|
|---|---|---|---|---|---|---|
||**Pooled OLS**|**Country-**|**Time-Effects**|**GMM-IV (D)**|<br>**------------------------------**|<br>**----------------**|
|**Variable**|**(1)**|<br>**Effects (2)**|**(3)**|<br>**(4)**|**(5)**|**(6)**|
||0.1527**||0.1712**|0.2214**|0.2956**|0.3064**|
|**Constant**<br>**Output per**|(0.03)||(0.03)|(0.02)|(0.04)|(0.06)|
|<br>**capital (in**|-0.0147**|-0.0663**|-0.0145**|-0.0143**|-0.325**|-0.0381**|
|**logs)**|(0.00)|(0.01)|(0.00)|(0.00)|(0.01)|(0.01)|
|**Human**|0.0020|-0.0045|0.0059**|0.0079**|0.0081*|0.0059|
|**Capital**|(0.00)|(0.00)|(0.00)|(0.00)|(0.00)|(0.01)|
|**Financial**|0.0024*|0.0057**|0.030**|0.0036**|0.0026**|0.0020*|
|**Depth**|(0.00)|(0.00)|(0.00)|(0.00)|(0.00)|(0.00)|
|**Government**|-0.0102**|-0.0190**|-0.0091**|0.0016|-0.0128**|-0.0172**|
|**Burden**|(0.00)|(0.01)|(0.00)|(0.00)|(0.00)|(0.01)|
|**Trade**|-0.0051|0.0276**|0.0007|-0.0046*|0.0267**|0.0215**|
|**Openness**|(0.00)|(0.01)|(0.00)|(0.00)|(0.01)|(0.01)|
||0.0038**|0.011|0.0030**|0.0005|0.0027**|0.0039**|
|**Governance**|(0.00)|(0.00)|(0.00)|(0.00)|(0.00)|(0.00)|
||-0.0190**|-0.0177**|-0.0166**|-0.0204**|-0.0236**|-0.0214**|
|**Inflation**|(0.00)|(0.00)|(0.00)|(0.00)|(0.00)|(0.00)|
|**RER**|-0.0053*|0.0035|-0.0064**|-0.0131**|-0.0046**|0.0017|
|**Overvaluation**|(0.00)|(0.00)|(0.00)|(0.00)|(0.00)|(0.00)|
|**Terms of**|0.0251|0.0221|0.0140|0.0733**|0.0391**|0.0464**|
|**Trade Shocks**|(0.03)|(0.02)|(0.03)|(0.01)|(0.02)|(0.02)|
|**Infrastructure**|0.0072**|0.0195**|0.0059**|0.0043**|0.0207**|0.0226**|
|**Stock**<br>**-----------------------**|(0.00)<br>**--------------------------**|90.010<br>**-------------------------**|(0.00)<br>**---------------------------**|(0.00)<br>**-------------------------**|(0.01)<br>**------------------------------**|(0.01)<br>**----------------**|
|<br>**Observation**|<br>399|<br>331|<br>399|<br>331|<br>331|<br>331|
|**R**2**|0.199|0.346|0.0274|0.0219|0.409|0.407|
|**Specification**<br>**Test (p-value)**|||||||
|**-Sargan Test**<br>**-Second**||||(0.52|(0.71|(0.81)|
|**Order**|||||||
|**Correlation**|(0.01)|(0.84)|(0.11)|(0.9)|0.78)|(0.81)|

Number in parenthesis below the coefficient estimates are standard errors *(**) implies that the variable is significant at the 10(5) percent level. 1/The GMM-IV System estimations presented in columns {5} and {6} differ in the set of instruments used. In {5} the analysis used only internal instruments (lagged levels and lagged differences of all the explanatory variables in the regression. In {6} we use internal instruments for the growth determinants except for the infrastructure variable. For the variable of interest (infrastructure) actual and lagged levels are used as well as lagged differences of demographic variables such as the urban population, the size of the labor force and population, the size of the labor force and population density. 2/The aggregate infrastructure stock is the first principal component of the following normalized variables: main telephone lines per 1000 workers, energy generating capacity (in GW per worker), and roads (in km per sq.km) _<u>Source: Calderon and Serven, 2004b</u>_ 15