Infrastructure, Commodity Spectra, and Trade Transitions in Economic Development

Infrastructure growth and its regional concentration can accelerate growth and diversification of international trade, in terms of both commodities and the implied factor content. The origins and mechanism are explored via a model of endogenous growth that internalizes social spending on physical infrastructure, leading to the accumulation of human capital as a result of learning by doing. Infrastructure developed in the first instance to enhance and diversify manufactured exports can create a supply push into the export of human capital services. As a leading case study, China's recent free trade agreements show clear signs of a development strategy shifting orientation towards the export of services, such as those relating to infrastructure construction and tourism, and the financial services required in support.