The Relationship between Road Infrastructure Development and Long-run Economic Growth in Ethiopia: The ARDL Approach

Considering Ethiopia as one of the landlocked countries and has given a high priority to the road transport infrastructure sector in east Africa, this study examines the effect of road transport infrastructure development on economic growth throughout 1981-2017. To assess the economic effect of road infrastructure, we first perform unit root tests using the augmented dickey-fuller (ADF) unit root test approach. Then, we assess the co-integration between road transport infrastructure and economic growth using the autoregressive distributed lag bound test model by conducting an F test. Once co-integration is established, the Ordinary Least Square estimation technique was used to estimate the elasticity of economic growth using autoregressive distributed lag-error correction model approaches; the obtained result shows that road infrastructure has a considerable positive effect on long-term economic growth in Ethiopia. The study concludes that road infrastructure is essential for growth in the economy and the study highlights substantial issues that policymakers should give due attention to the effective formulation and implementation of road infrastructure development policies in Ethiopia.