Infrastructure and economic growth: the case of Mali

Abstract

The main objective of this study is to analyze the effect of infrastructure on economic growth in Mali over the 1991-2020 period. The originality of this research lies in the use of quantitative indices based on physical measures as a proxy for infrastructure. The secondary data used in this work come from two sources: the African Development Bank (Africa Infrastructure Development Index, AIDI) and the World Bank (World Development Indicators, WDI). The error correction model (ECM) was used to examine this relationship. Our empirical results indicate that transport infrastructure is a positive and significant determinant of GDP per capita growth in both the short and long run. The coefficient is rather small but highly significant. A one-point increase in transport infrastructure stocks would lead to an increase of about 0.32 points in GDP per capita in the long run.  As for water and sanitation infrastructure stocks, a 1% increase in their level leads in the short run to an increase in GDP per capita of about 0.038%, but in the long run it is not significant. As for the energy and telecommunications infrastructure stocks, the results of our estimations revealed that these infrastructures do not have a significant effect on economic growth in either the short or long term. Therefore, more investment in physical infrastructure would be beneficial. Increased investment in physical infrastructure and the mobilization of significant resources for infrastructure maintenance can be a powerful engine of economic growth.

One of the limitations of this study is that it does not take into account the ecological effect, as the realization of infrastructure requires a significant amount of space, which could negatively affect the environment of a country.

Classification JEL: E22

Paper Type: Empirical Research