THE OPTIMAL LEVELS OF INFRASTRUCTURE IN AN ECONOMY: AN INPUT-OUTPUT APPROACH AND THE FULL FEED-BACK RELATIONS

Year 2000, Volume: 18 Issue: 1, 83 - 94, 01.07.2000

Metin Arslan

Abstract

Within
the Input-Output framework, an infrastructure matrix is proposed, using the
seven-category infrastructure scheme on the basis of sector of origin versus
destination, to satisfy the question of how much and what
kind of infrastructure is needed in an economy for optimal growth.

Â
seven-category infrastructure classification scheme is proposed to allow
infrastructure matrices to be constructed for use as planning technologies, and
the necessary capital stock variables to be defined for studying the economic
impact of infrastructure.

This study
aims at answering policy questions concerning the optimal levels of
infrastructure in a framework consistent with the multidisciplinary nature
ofthe infrastructure problem.

Attempts
to guide public policy on infrastructure are hampered by two
problems, First is the failure of competing economic paradigms to develop
satisfactory methods of accounting for the economic impact of infrastructure.
Second is the cumbersome system of classifying infrastructure
categories because infrastructure is used as an umbrella term for a collection
of diverse private and public systems.

Keywords

Optimal infrastructure, Economic impact of infrastructure, Public policy

References

• M. Arslan (1993), Public Investment and Infrastructure Planning: A Policy Modelling Approach for the Turkish Investment Sector, Ph.D. Thesis, Colorado State University, Fort Collins, CO