Infrastructure and Economic Growth: Evidence from Lower Middle-Income Countries

A gap of infrastructure development exists between developed and lower-middle income countries (LMICs), and this gap is widening. This situation emphasizes to explore the dynamic association between infrastructure and economic growth in lower-middle income countries. The objective of this study is to analyze the contribution of infrastructure in economic growth across 18 lower-middle income countries for the period of 1995–2017 by applying fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS). The study finds that investment in telecommunication, electricity power consumption, and transportation contributes to economic growth in lower-middle-income countries. Thus, continuous investment is needed in transportation, electricity power, and communication sectors to achieve the target of high economic growth.