Infrastructure and Economic Growth

I estimate the effect that growth in countries’ GDP per capita has on the growth rate of infrastructure. In order to extract exogenous variation in GDP per capita growth, I use the growth of the international oil price multiplied with countries’ GDP shares of oil net-exports as an instrumental variable. My instrumental variables estimates show that, for both democracies and autocracies, GDP per capita growth has a significant positive effect on infrastructure growth. This effect is significantly smaller in anocracies—so much so that, in anocracies, GDP per capita growth has no significant effect on the growth rate of infrastructure.