RELATIONSHIP BEWEEN INFRASTRUCTURE DEVELOPMENT AND ECONOMIC GROWTH IN ECONOMIC GROWTH IN ETHIOPIA: A TIME SERIES.

Abstract

Researches has shown direct and indirect contribution of road infrastructure for sustainable economic growth at national level. The main objective of the study to examine the link between road infrastructure development and economic growth and identify the long- and short-term impact of infrastructure development in Ethiopia using time serious data from 1975-2019.To achieve this objective co-integrated VAR approach was employed. The estimated models enable to understand the long run and short run nexus of the variables. The long run test show that gross domestic exerts positive and significant impact on Asphalt road and gravel road; Asphalt road and Gravel road exert positive and significant impact on economic growth; Ruler road exert negative and significant impact on economic growth. The short run test results reveals that the impact of Asphalt on economic growth is significant where as others have insignificant values so that short run causality isn’t occurred. The granger causality test shows real gross domestic product granger-causes Asphalt road, gravel road, ruler road. The Asphalt road granger-causes economic growth and gravel road; it doesn’t cause, ruler road. The gravel road granger-cause real domestic product while it doesn’t cause Asphalt road and ruler road enrollment. Whereas the Ruler road case the granger-case gross domestic product; it doesn’t cause Asphalt road and gravel road. By way of recommendation, donors need to strengthen their support on road financing in order to maintain the road infrastructure and the government has to give a sufficient attention both in terms of regional or federal road authorities.