Formulation of infrastructure index for BRICS and the effect on growth

Abstract

The purpose of the paper is to formulate a composite infrastructure index for BRICS countries. In this study, index is formed by combining sub-indices of telecommunication sector and energy sector, based on methodology used by McNeil et al. This study employs a time span of 33 years divided into four structural breaks. This paper also examines the linkage between infrastructure index and economic growth using time series analysis for BRICS countries. It is detected that telecommunication index shows increasing trend of growth in all structural breaks. Energy index shows an increasing trend from 1984 to 1991 followed by a decreasing trend from year 1992 to 1999. Energy index also shows an increasing trend from year 2000 to 2007 and year 2008 to 2016. Final infrastructure index shows an increasing trend of growth in all structural breaks. It is detected that infrastructure index has an insignificant effect on economic growth.