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71241-1 Report Abstract

Public Investment and U.S. Productivity Change: An Evaluation of Recent Research

Bill Luker, Jr., Texas Transportation Institute, Texas A&M University, Monograph Series, June 1992, 39 pp.

Recent research has uncovered an apparent relationship between rate os productivity growth and level os investment in core infrastructure by the public sector. If valid, these findings account for most of the widely reported slowdown in U.S. rates of productivity growth in recent decades, and lend a measure of intrinsic worth to government intervention in the national economy more fundamental than a merely countercyclical role. This review (a) outlines the central results of the dozens of research efforts mounted in the last decade that attempt to explain the U.S. productivity slowdown; (b) retraces the findings of the researchers most noted for their linking of infrastructure investment with productivity changes; (c) recapitulates the criticisms to which they have been subjected in recent months; and (d) summarizes the main issues that divide protagonists and antagonists in this arena. Finally, a set of empirical and theoretical issues are introduced that have not been given adequate attention by researchers on either side of the debate.

Keywords: Productivity, Infrastructure, Investment, Transportation

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Reference Report #71241-1