Assessing the Impact of Infrastructure Development on Economic Growth in the Light of KLEMS Growth Accounting

Abstract

It is widely believed that the impact of infrastructure development on economic growth is positive. However, the controversial issue is how positive it is. This paper presents the general view of the demand-side school of economics on this topic, the view often found among neoliberal economists, and a more contemporary concept called here “sustainable” infrastructure investment. The use of KLEMS productivity accounting, a proven variant between economic growth accounting methods, is proposed as a way to study the phenomenon. A suitably modified growth decomposition model is demonstrated on the example of the aggregate Polish economy as a tool for studying the phenomenon.