On the road to economic prosperity - The role of infrastructure in Ghana
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Abstract
In this Element, we investigate how the Ghanaian household wealth index is impacted by travel time reduction, which was a direct effect of infrastructural investments from 2000 to 2016. The wealth index was constructed based on the possession of selected assets and reflects the well-being of residents in Ghana. We employed two datasets, the Demographic and Health Survey (DHS) and the DHS Covariates. The two-stage least square estimation was implemented to establish the causal relationship. We find that a 10 percent reduction in travel time from 2000 to 2015 would result in a 1.2 percent increase in the wealth index from 2003 to 2016. This finding is robust to various settings, including the addition of more control variables, the use of different instrumental variables, and the study of both short-term and long-term effects. Our analysis lends support to the Ghanaian government’s current economic and infrastructure development plans.