In recent years, there has been an increasing interest in the fact that publiccapital, or public infrastructure, plays a crucial role in determining economic growthin low-income countries. This thesis studies the links among public capital, economicdevelopment, and growth, using overlapping generations (OLG) models.Chapter 1 develops a three-period, gender-based overlapping generations modelof endogenous growth with endogenous intra-household bargaining and child labourin home production by girls. Improved access to infrastructure reduces the amount oftime parents fi
nd optimal for their daughters to spend on household chores, therebyallowing them to allocate more time to studying at home. The model is calibratedfor a low-income country and various quantitative experiments are conducted. Thisincludes an increase in the share of public spending on infrastructure, an increase intime allocated by mothers to their daughters, and a decrease in fathers' preferencefor their daughters' education. Our analysis shows that poor access by families toinfrastructure may provide an endogenous explanation, beyond social norms andcultural values, for the persistence of child labour at home and gender inequality inlow-income countries.In Chapter 2, the link between infrastructure and industrial development is stud-ied in an OLG model with endogenous skill acquisition. Industrial developmentis defi
ned as a shift from an imitation-based, low-skill economy to an innovation-based, high-skill economy where ideas are produced domestically. Imitation gen-erates knowledge spillovers, which enhance productivity in innovation. Changes inindustrial structure are measured by the ratio of the variety of imitation-based toinnovation-based intermediate goods. The model also distinguishes between basicinfrastructure, which helps to promote learning-by-doing and productivity in imi-tation activities, and advanced infrastructure, which promotes knowledge networksand innovation. Numerical experiments, based on a calibrated version for a low-income country, show that changes in the level and composition of public investmentin infrastructure may have signi
ficant effects on the structure of the labour force andthe speed of industrial development.
- Economic Growth
- Public Capital