THE ROLE OF INFRASTRUCTURE IN SAUDI ARABIA'S DEVELOPMENT: THE RELATIVE IMPORTANCE OF LINKAGE VS SPREAD EFFECTS

During the last decade, Saudi Arabia has had perhaps the largest ever program of investment in transport and related infrastructure. Since the expansion in oil revenues in 1973/74 the country invested in a wide variety of programs to expand not only its road network, but sea and air ports as well. In large part the rationale of this program was based on the presumption that the cost reducing impact of this investment would make private investment much more profitable, and thus stimulate a major expansion in private sector output. The purpose of this paper is to determine the manner in which the country's expanded infrastructure has impacted on the economy. Specifically, a test is made of the Hirschman thesis whereby expanded social overhead capital induces increased levels of private sector investment. The main finding of the study is that Saudi Arabia's expanded infrastructure has stimulated private consumption and non oil incomes, but not private investment. Apparently the demand related spread effects of infrastructure have been stronger than the more direct Hirschman type linkage effects. There are several important policy implications stemming from this result. First, it appears that the country's strategy of infrastructure led development, while successful in generating higher real incomes, has done so at costs that can no longer be sustained. Perhaps more importantly, it appears that more direct programs must be designed to induce expanded private sector investment. (Author/TRRL)

• Availability:
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• Authors:
  • Looney, R E
• Publication Date: 1989-2

Media Info

• Features: References;
• Pagination: p. 57-77
• Serial:
  • International Journal of Transport Economics
  • Volume: 16
  • Issue Number: 1
  • ISSN: 0391-8440
  • Serial URL: http://www.libraweb.net/riviste.php?chiave=67

Subject/Index Terms

• TRT Terms: Benefit cost analysis; Developing countries; Development; Economic factors; Economic growth; Economics; Freight transportation; Improvements; Infrastructure; Investments; Mathematical models; Networks; Roads; Trade; Transportation
• Uncontrolled Terms: Growth rate; Road networks
• Geographic Terms: Saudi Arabia
• ITRD Terms: 226: Cost benefit analysis; 150: Developing countries; 9013: Development; 255: Economics; 263: Economics of transport; 741: Goods traffic; 265: Growth rate; 9108: Improvement; 227: Investment; 6473: Mathematical model; 1054: Network (traffic); 1053: Road network; 8097: Saudi Arabia; 330: Trade
• Subject Areas: Administration and Management; Economics; Planning and Forecasting; Transportation (General);

Filing Info

• Accession Number: 00492751
• Record Type: Publication
• Source Agency: Transport Research Laboratory
• Files: ITRD, TRIS
• Created Date: Mar 31 1990 12:00AM