Transport Investment and Poverty Reduction: The African Experience Using Dynamic Panel Data Estimates

This paper focuses on transport infrastructure as an element in poverty alleviation for the case of a sample of 21 African economies for the period 1980-2007. Using an aggregate poverty function at the macroeconomic level, both the static and dynamic panel estimates suggest a pro-poor impact of transport infrastructure. Growth of the country, financial development, human capital, communication infrastructure and employment are all found to be important ingredients in the poverty fight while inequality exacerbates it. The GMM estimates interestingly validated that poverty is essentially a dynamic phenomenon and constitutes a vicious cycle and a dynamic phenomenon. Further analysis using panel causality consolidated the importance of transport in poverty reduction and suggested no causal effect from poverty to transport infrastructure.